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Ocean Wilsons Holdings Limited

Annual Report 2010

Contents

1 Chairman’s Statement

4 Financial Review

6 Investment Managers Report

18 Wilson Sons Limited Operating Review

20 Directors and Advisers

21 Report of the Directors

26 Independent Auditors’ Report

27 Consolidated Statement of Comprehensive Income

28 Consolidated Balance Sheet

29 Consolidated Statement of Changes in Equity

30 Consolidated Cash Flow Statement

31 Notes to the Accounts

66 Statistical Statement 2006 – 2010

67 Notice of Annual General Meeting

69 Form of Proxy

Ocean Wilsons Holdings Limited/Annual Report 2010

Chairman’s Statement

1

Overview

Ocean Wilsons Holdings Limited (“Ocean Wilsons or the Company”) is a

Bermuda based investment Company and through its subsidiary operates as a

maritime services company in Brazil. The Company is listed on both the

Bermuda Stock exchange and the London Stock Exchange. It has two principal

subsidiaries: Wilson Sons Limited and Ocean Wilsons Investments Limited.

Wilson Sons Limited (“Wilson Sons”) is an autonomous Bermuda company

listed on the Sao Paulo Stock Exchange (BOVESPA) and Luxembourg Stock

Exchange. Ocean Wilsons holds a 58.25% interest in Wilson Sons, which is

fully consolidated in its accounts with a 41.75% non-controlling interest.

Wilson Sons is one of the largest providers of maritime services in Brazil.

Wilson Sons activities include harbour and ocean towage, container terminal

operation, offshore support services, logistics, small vessel construction and

ship agency.

Ocean Wilsons Investments Limited is a wholly owned Bermuda investment

company. The company holds a portfolio of international investments.

Introduction

I am pleased to report another good year of trading for Ocean Wilsons

Holdings Limited. Our maritime services business continued to experience

strong demand across all business segments and the investment portfolio

generated significant returns in the period. During the year we continued to

invest heavily in our core businesses and the Group remains well positioned

to meet our customers evolving needs and benefit from the strong growth in

Brazil.

Group Results

Revenue for the Group grew by 20% to US$575.6 million (2009: US$477.9

million) principally due to increases in port terminal and logistics revenue.

Operating profit margins for the Group were 5% lower at 12% (2009: 17%)

reflecting the change in sales mix, the adverse impact of a stronger Brazilian

Real against our reporting currency the US Dollar, higher employee expenses

and increased depreciation.

Profit before tax decreased by US$22.6 million from US$139.8 million to

US$117.2million principally due to the decrease in operating profit US$67.9

million (2009: US$79.3 million) lower gains from the investment portfolio of

US$22.5 million (2009: US$34.3 million) and exchange gains on cash

balances of US$4.0 million (2009: US$23.7 million). These were partially

offset by the profit realised on formation of the joint venture of

US$20.4 million.

Earnings per share based on ordinary activities after taxation and

non-controlling interests were 160.8 cents (2009: 198.5 cents).

Offshore Joint Venture

In June 2010 we were pleased to announce the formation of our offshore joint

venture between Wilson Sons Limited, through two of its subsidiaries in Brazil,

and Remolcadores Ultratug Ltda., a company owned by the Chilean maritime

group, Ultratug.

The joint venture vehicle named Wilson, Sons Ultratug Participações S.A.

(“Wilson Sons Ultratug”) is a 50/50 company set up between Wilson Sons and

the Ultratug groups that owns and operates offshore vessels to support oil and

gas exploration and production activities in Brazil.

Both Wilson Sons and Ultratug transferred their existing Brazilian offshore

businesses into the new joint venture. The principal objective of the joint

venture is to take advantage of the growing opportunities in Brazil’s oil and

gas industry and expand both groups’ operations in the offshore segment.

Tecon Salvador

In September 2010 Tecon Salvador signed an amendment to the terminal

lease agreement with the Companhia das Docas do Estado da Bahia

(CODEBA). The amendment granted the company the area adjacent to Tecon

Salvador known as Ponta Norte for an initial payment of US$14.5 million and

amendments to the rental and container handling fee agreements. This

additional area will allow Tecon Salvador to extend the quay and back area

while deepening the draft to accommodate the larger container vessels

operating in Brazil.

Brasco

In June 2010 we acquired the remaining 25% non-controlling interest in our

onshore base manager and logistics business, Brasco Logistica Offshore Ltda

for US$9.0 million. The acquisition of the non-controlling interest increases our

exposure to the growing offshore oil and gas industry.

Investment Portfolio

Investment managers

The Group’s investment portfolio is held by Ocean Wilson Investments Limited

(“OWIL”) a wholly owned subsidiary registered in Bermuda. OWIL appointed

Hanseatic Asset Management LBG a Guernsey registered and regulated

investment group as its Investment Manager in November 2000.


Chairman’s Statement

2

Investment strategy

The Board of OWIL determines investment guidelines and restrictions in

conjunction with the investment manager, these together with the investment

managers reports are reviewed at the OWIL board meetings.

The investment strategy agreed with the Company’s investment managers is

to maximise the total return on assets, by investing in a portfolio of diversified

assets including global equities, fixed income and alternative assets with a

particular emphasis on emerging markets. Investments are intended to add

value over the medium to longer-term through a non-market correlated,

conviction-based investment style.

Investment portfolio performance

Following the fall in equity markets in the second quarter, share prices rose

across the board in the second half of the year generating satisfactory returns

for the period. The trading investment portfolio and cash under management

increased US$18.2million (after capital redemptions of US$5million), from

US$245.2 million at 31 December 2009 to $263.4million at year end.

Approximately 50% of the investment portfolio is invested in global equities,

31% in alternative assets, 9% in bonds and the balance in cash and liquidity

funds. The investment managers continued to deploy the portfolio’s cash and

liquidity funds in new investments and at year end the investment portfolio

held US$24.7 million in cash and liquidity funds, down from US$75.1 million

in 2009. Details of the individual investment holdings at 31 December 2010,

new investments made during the period and performance, are contained

within the Investment Managers report.

Wilson Sons Limited

At the close of business on the 21 March 2011, the Wilson Sons share price

was Real 27.80 resulting in a market value for the Ocean Wilsons holding of

41,444,000 shares (58.25% of Wilson Sons) of approximately US$689.9

million which is the equivalent of US$19.51per Ocean Wilsons Holdings

Limited share.

Brazil

In 2010 GDP grew in excess of 7%. 2010 was also an election year in Brazil

and Dilma Rousseff was elected president. The new government so far has not

implemented any major changes in policy except to announce a R$50 billion

reduction in government expenditure to remove some of the fiscal stimulus in

the economy.

Brazil continues to boom thanks in large part to commodity prices and the

economic stability of the last decade. China became the most significant trade

partner and investor in Brazil. The consensus forecast for growth in 2011 is

4-5% although the economy is showing signs of overheating with high

capacity utilisation and a tight labour market. The currency remains strong

pushed by high commodity prices and foreign capital inflows attracted by the

high real interest rates. The government is tightening monetary policy with

interest rates rising to 11.75 % in an attempt to control inflationary pressures.

Inflation as measured by the CPI (consumer price index) is currently running at

6% per annum. The country continues to invest in infrastructure and the

development of the pre salt offshore oilfields.

Dividend

The Board is recommending a final dividend of 38 cents per share to be paid

on 31 May 2011, to shareholders on the register at close of business on

13 May 2011. In 2009 no final dividend was paid; instead a second interim

dividend of 38 cents per share was paid in March 2010. Together with the

interim dividend paid in October 2010, this will give a total dividend for the

year of 42 cents per share (2009: 42 cents per share).

The dividend for the year represents the full dividend to be received from

Wilson Sons relating to 2010 plus approximately 1.7% of the average capital

employed in the investment portfolio consistent with the Board’s dividend

policy in respect of each financial year of paying the Company’s full dividend

to be received from Wilson Sons in the period plus a percentage of the

average capital employed in the investment portfolio to be determined

annually by the Board.

Dividends are set in US Dollars and paid twice yearly. Shareholders will

continue to receive dividends in Sterling by reference to the exchange rate

applicable to the US Dollar on the dividend record date, except for those

shareholders that elect to receive dividends in US Dollars.

The Board of Directors may review and amend the dividend policy from time

to time in light of our future plans and other factors. The payment of

dividends cannot be guaranteed and may be discontinued or varied at the

discretion of the Board.

Long-term incentive plan

Ocean Wilsons Holdings Limited “OWHL” implemented a cash settled phantom

option scheme that was approved by shareholders at the Special General


3

Meeting held on 19 April 2007. The scheme is for selected senior

management and the options provide for the option holder to receive on

exercise the difference between the option price and the market value of

Wilson Sons per OWHL share at the time of exercise.

During 2010 participants exercised 280,280 options. The maximum

remaining liability under the plan is US$8.3 million based on the Wilson Sons

IPO offer price. An accrual of US$6.7 million (2009: US$7.0 million) has been

included in the 2010 accounts for benefits accruing under the plan.

Charitable donations

Around the Group our offices are widely engaged with the local community.

Through our corporate programme “Criando Lacos” (Creating ties), the Group

provides financial support and promotes employee involvement in social

initiatives.

We are also proud to support a number of local causes and during the year

the Group made contributions of US$105,000 (2009: US$102,000) to

charitable causes. The Group makes one off contributions as well as

supporting some charities on an on-going basis. The Group’s principal

contributions in 2010 were:

Task Brasil – Casa Jimmy project to improve the lives and supports the

needs of children and pregnant teenage girls living on the streets of

Brazil. The institution is located in Santa Teresa, Rio de Janeiro.

Website: www.taskbrasil.org.uk

Brigada Mirim Ecologica – maintaining the ecology of Ilha Grande in

the state of Rio de Janeiro and raising the awareness of visitors and the

local population about the environment.

Website: www.brigadamirim.org.br

Rio Voluntario – Supports and provides assistance to voluntary

organisations.

Website: Riovoluntario.org.br

Board of Directors

It was with deep regret that we announced the death of our fellow director

and colleague Mr. Francisco Gros in May 2010. Mr. Gros served as a Director

of Ocean Wilsons Holdings Limited since 2004 and was the Chairman of

Wilson Sons Limited. On behalf of your Board I would like to acknowledge

and express our gratitude for his valued contribution to the Group.

Outlook

The Brazilian economy remains strong with forecasts predicting growth of

4-5% in 2011 The Group continues to grow and invest in our core maritime

businesses which are experiencing strong demand across all segments.

In 2011 we will continue the expansion of our shipyard at Guaruja to service

the increasing demand for offshore support vessels. So far in 2011 we have

already delivered the Platform Supply Vessel (PSV), Torda to our offshore joint

venture and during the year we expect to deliver a further two PSVs to the

joint venture and seven new tugboats for our own fleet. We have started work

on expanding the terminal at Tecon Salvador and are already operating the

extended back area granted in September 2010.

Management and staff

On behalf of your Board, I would like to thank our management, staff and

partners for their hard work and dedication throughout the year.

J. F. Gouvêa Vieira

Chairman

25 March 2011


Financial Review

4

Revenue

Revenue for the year increased 20% to US$575.6 million (2009: US$477.9

million) driven by growth in our Brazilian maritime services business,

principally port terminals, logistics and shipbuilding. Port terminal revenue

benefited from increased container volumes, improved sales mix and strong

growth at our Oil and Gas terminal business, Brasco. New business and higher

imports increased Logistics revenue 35% in the year to US$102.4 million

(2009: US$75.8 million). The fall in offshore revenue attributable to the

creation of our new joint venture, Wilson Sons Ultratug (Previously we

consolidated 100% of offshore revenue, now we consolidate 50% of the joint

venture revenue) was partially offset by the recognition of what were

previously intercompany sales to Wilson Sons Ultratug. All Group revenue is

derived from Wilson Sons operations in Brazil.

Operating profit

Operating profit for the year remained strong at US$67.9 million although

US$11.4 million lower than 2009, US$79.3 million. Operating costs increased

US$108.7 million to US$507.7 million from US$399.0 million in 2009 due to

an increase in business volume, the continued strength of the Brazilian Real

against our reporting currency, the US Dollar, higher employee expenses and

depreciation. In addition no fiscal credits relating to prior periods were

recognised in the year while 2009 benefited by US$6.5million.

Employee expenses for the year rose 27% to US$205.5 million (2009: US$162.4

million) as a result of increased headcount to attend new business, collective

labour agreements and the exchange rate effect on Real denominated expenses.

Wages were driven higher by Brazilian domestic inflation and shortages of skilled

labour in the booming offshore sector. The share based payment expense from

the Group’s two long-term incentive schemes remained broadly unchanged at

US$16.5 million (2009: US$17.2 million).

Depreciation in the year has increased to US$42.4 million from US$31.9

million in 2009 reflecting the significant capital expenditure undertaken by

the Group in port operation, towage and offshore businesses last year.

Raw materials increased from US$49.6 million to US$67.2 million due

principally to the increase in shipyard sales.

Exchange rates

The Group reports in US Dollars and has revenue, costs, assets and

liabilities in both Brazilian Real and US Dollars. Therefore movements in the

US Dollar/Brazilian Real exchange rate can impact the Group both positively

and negatively from year to year. In 2010 the Brazilian Real appreciated 4.8%

against the US Dollar from R$1.74 at 1 January 2010 to R$1.66 at the year

end.

The main impacts from the appreciation of the Brazilian Real against the

US Dollar at year end was a net exchange gain of US$3.8 million

(2009: US$24.0 million) on the Group’s Real-denominated cash balances

reported in the income statement and a currency translation adjustment gain

to net equity of US$4.6 million (2009: US$16.1 million).

Although the Brazilian Real appreciated 5% against the US Dollar at year end,

the average Real/US Dollar exchange rate during the year at 1.76 was 12%

lower than the comparative period in 2009, 2.00. The lower average

exchange rate adversely impacts Real denominated costs when converted into

our reporting currency, US Dollars.

Profit realised on formation of joint venture

A gain of US$20.4 million was realised on formation of the offshore joint

venture with Ultratug.

Investment revenues

Investment revenue in 2010 decreased US$17.6 million to US$18.0 million

from US$35.6 million in 2009. This decrease was primarily due to lower

exchange gains on cash and cash equivalents of US$ 4.0 million (2009:

US$23.7 million) Exchange gains arise principally on Brazilian Real

denominated cash balances and the significant gain in 2009 was due to the

25% appreciation of the Brazilian Real against the US Dollar in 2009. Interest

from bank deposits at US$10.2 million was in line with prior year (2009:

US$10.4 million). The investment portfolio received dividends from equity

investments in the year of US$3.8 million (2009: US$1.5 million).

Other gains and losses

Other gains at US$22.5 million were US$11.8 million lower than 2009,

US$34.3 million reflecting the lower returns in 2010 from world equity

markets. Other gains arise from the Group’s portfolio of trading investments

and represent increases in the fair value of trading investments held at year

end and profits on the disposal of trading investments during the year.

Finance costs

Finance costs in 2010 increased by US$2.2 million to US$11.6 million from

US$9.4 million. The increase is principally attributable to higher interest

payments as a result of increased borrowings.


5

Profit before tax

Profit before tax for the year was US$117.2 million compared with US$139.8

million for 2009. The decrease in profit before tax is principally due to the fall

in operating profit, decreased investment revenue in the period and lower

returns from the investment portfolio. Profit realised on formation of the

offshore joint venture positively impacted profit before tax by US$20.4 million.

Taxation

The tax charge in the year of US$30.6 million is marginally lower than 2009,

US$31.2 million. Current tax in Brazil decreased by US$12.3 million to

US$31.2 million (2009: US$43.5 million) as the profit on the realisation of the

joint venture is not included in determining taxable profit. The decrease in the

current tax charge was partially offset by a lower deferred tax credit in the

period of US$0.7 million (2009: US$12.4 million). The lower deferred tax

credit is principally attributable to a reduced IFRS deferred tax credit of

US$6.6 million (2009: US$35.1 million) arising on the retranslation of the

non-current assets caused by the appreciation of the Real against the US

Dollar. This IFRS deferred tax effect is partly offset by a deferred tax charge of

US$1.5 million (2009: US$15.2 million) arising from the exchange variance on

borrowings.

Net income arising in our Bermudian companies that are not subject to

income or capital gains tax and deferred tax movements were US$10.7

million lower at US$0.9 million. (2009: US$11.6 million). The lower net

income primarily reflects decreased returns from our Bermudian investment

portfolio as the share based payment expense from the Group’s two long-term

incentive schemes remained broadly unchanged. The combined effect of these

movements increased the effective tax rate for the period to 26% compared

with 22% in 2009. The corporate tax rate prevailing in Brazil is 34%.

Earnings per share

Basic earnings per share for the year were 160.8 cents, compared with

198.5 cents in 2009.

Cash flow

Net cash flow from operating activities was US$85.5 million (2009: US$52.2

million). The improved cash movement in the year reflected the benefits of

better working capital management and lower income taxes paid.

Capital expenditure of US$162.0 million was mainly invested on vessel

construction and equipment for port operations and logistics (2009: US$139.7

million). During the year the Group also invested in the expansion of Tecon

Salvador and our shipyard in Guaruja.

New loans of US$77.7 million (2009: US$83.9 million) were raised in the

period to finance capital expenditure. Repayments of borrowings in the year

in accordance with debt repayment schedules were US$19.0 million (2009:

US$16.8 million).

At 31 December 2010 the Company and its subsidiaries had US$130.1 million

in cash and cash equivalents (31 December 2009: US$196.4 million) of which

US$41.4 million was in US Dollar denominated assets and US$85.8 million in

Brazilian Real denominated assets.

Balance sheet

Equity attributable to equity holders of the parent increased from US$493.0

million at the beginning of the year to US$535.1 million principally due to the

profit in the period attributable to equity holders of the parent less dividends

paid. On a per share basis this is the equivalent of US$15.13 per share

(31 December 2009: US$13.94 per share). Within this trading investments

plus cash held by Ocean Wilsons Investments Limited of US$263.4 million

equates to US$7.45 per share.

Included in the Group’s trading investments of US$297.3 million at

31 December 2010 is US$36.7 million in US Dollar denominated fixed rate

certificates held by Wilson Sons Limited. These investments are not part of the

Group’s investment portfolio managed by Hanseatic Asset Management LBG

and are intended to fund Wilson Sons Limited operations in Brazil.

Debt

The Group uses debt principally to finance vessel construction, the

development of the container terminals at Rio Grande and Salvador and

equipment for logistic operations. The majority of debt has long maturity

profiles with fixed debt repayment schedules. At 31 December 2010 the

Group’s borrowings (including obligations under finance leases) were

US$325.3 million (31 December 2009: US$268 million) of which

US$294.9 million is non-current.

All debt at year end is held in the Wilson Sons Limited Group and has no

recourse to the parent company, Ocean Wilsons Holdings Limited or the

investment portfolio held by Ocean Wilsons Investments Limited.

Keith Middleton

Finance Director


Investment Managers Report

6

Hanseatic Asset Management LBG that manages the Group’s Investment

portfolio reports as follows:

Market background

Global equity markets recovered from a second quarter slump and rallied

strongly in the second half of 2010. Many indices ended the year at or above

their levels at the time of the Lehman Brothers bankruptcy in September

2008. The MSCI World Index of Developed Markets gained 11.8% over the

period and the MSCI Emerging Markets Index gained 18.9%.

In the first half of the year, investors became anxious as China introduced

tightening measures to combat rising inflation and intensified concerns over

Greece led to a significant Greek rescue package and the introduction of a

€750bn regional bailout facility. Market jitters heightened in May when the

Dow Jones plunged 700 points in eight minutes following a system failure

and BP’s oil spill in the Gulf of Mexico wiped off £60bn from the company’s

market capitalisation. In the second half of the year, a significant rally in risk

assets commenced ahead of the US Federal Reserve’s announcement of an

additional $600bn round of quantitative easing in November. The US

economy developed some positive momentum in the fourth quarter as

corporations continued to beat earnings estimates and manufacturing activity

remained strong.

With the exception of some European indices, Developed Markets rallied

strongly in the second half of the year to finish 2010 at post crisis highs. The

S&P 500 Index in the US rose 15.1%, the FTSE 100 Index in the UK rose

9.2% and the DAX Index in Germany was a standout performer amongst

continental European markets gaining 8.5% whilst the CAC Index in France

fell by 6.0%. The Topix Index in Japan posted a significant gain of 15.9%;

nevertheless performance was flat on a local currency basis.

Amongst Emerging Markets, the strongest performances came from the RTS

Index of Russia which gained 22.6% and the Bombay Sensex Index of India

which rose 22.2%. The Bovespa Index of Brazil, which had posted the largest

gains of the BRIC countries in 2009, saw a comparatively modest rise of 6.1%

in 2010, most of which was attributable to currency appreciation. The MSCI

Asia Pacific ex-Japan Index rose 16.9%, driven by South-East Asian economies

including Indonesia, Thailand and the Philippines, whilst the Chinese market

was a notable laggard as the domestic A-share CSI 300 Index lost 8.4% over

the year.

Commodity prices rallied during the year, driven by continued strength of

demand from Emerging Markets and supply constraints resulting from

extreme global weather events and continued political instability in certain

supplier countries. Precious Metals and Agriculture posted the largest gains.

Gold rose 29.5%, ending the year at $1,420 per ounce on the back of

continued concerns about the increasing supply of paper money and

agricultural commodities rebounded with Corn prices increasing by 30.7%,

Soybeans 34.9% and Wheat 21.2%. The price of West Texas Intermediate

crude oil gained 8.5%, ending the year at $92 per barrel. Industrial metals

rallied on the back of further quantitative easing as Copper prices increased

by 29.7%.

In currency markets, the US Dollar reversed some of its 2009 losses,

appreciating 3.4% against Sterling and 7.1% against the Euro. However it

depreciated against the Yen by 12.9% and weakened against commodity

currencies, losing 12.2% against the Australian Dollar, 4.6% against the

Canadian Dollar and 4.8% against the Brazilian Real. The notion of competitive

currency devaluations amongst nations to improve their growth prospects

gained impetus during the year as significant currency interventions were seen

from the central banks of Brazil and Japan. In June the People’s Bank of China

announced that it would manage the Renminbi exchange rate more flexibly,

allowing the currency to appreciate or depreciate by up to 0.5% against the US

Dollar in a single day. This move saw a slight appreciation of the Renminbi by

approximately 3% versus the US Dollar. China’s refusal to let its currency

appreciate more significantly remains at the centre of global imbalances.

In fixed income markets, positive performance continued across all sectors,

however at a declining pace after significant spread contraction in the prior

year. The broad global indices of Sovereign Debt, Investment Grade Corporate

Debt, High Yield Corporate Debt and Emerging Markets Debt all posted gains

over the period. Additional quantitative easing in the US led treasury yields on

a continued downwards trajectory. US ten year treasury yields fell to 3.3%

from 3.9%, albeit having posted a significant rebound from a low of 2.4% in

October, UK ten year gilt yields fell to 3.4% from 4.0% and the European

Central Bank ten year yield fell to 3.0% from 3.4%. Elsewhere, yields on

Japanese 10 year government bonds continued to tighten, moving to 1.13%

from 1.30%, despite snowballing government debt approaching 200% of GDP.

Analysis of investment silos

There are four main ‘silos’ in the OWIL portfolio: (i) Global Equities, (ii)

Alternative Assets, (iii) Bonds and (iv) Cash.

‘Global Equities’ (50.2% of NAV as at 31 December 2010) is comprised of

holdings that are sensitive to stock market movements and may take the form

of investments in open-ended funds, closed-ended list funds (such as

Investment Trusts), UCITS funds, long / short directional hedge funds as well

as direct quoted equities. Global Equities achieved performance of +16.2% in

2010.

‘Alternative Assets’ (31.2% of NAV) is comprised of three constituents:

(i) Private Assets, (ii) Market Neutral Funds and (iii) Liquid Real Assets.

Private Assets (10.1% of NAV) contains fixed life investments typically with

lives of approximately ten years and often structured through commitments to

Limited Partnership vehicles that make investments in private equity, private

real assets (such as property and natural resources) and private debt (such as

distressed debt and mezzanine financing). These investments offer access to

longer cycle plays, typically with less volatility than and lower correlation to

public security markets. Phased drawdown of capital reduces market timing

risk. The first commitment to Private Assets was made in 2007. A total of 14

commitments (totalling $61.6m) have been made as at 31 December 2010.

$31.0m has been drawn down to date, indicating that this silo is at an

immature stage of value realisation. Private Assets achieved performance of

+3.5% in 2010.


7

Above: The Brasco offshore base located in Rio de Janeiro, which

provides support services to the oil and gas industry.



8

Market Neutral Funds (18.5% of NAV) contains ‘all-weather’ holdings in funds

which exhibit low correlation to public security markets and have the ability to

generate positive absolute returns regardless of the prevailing market

environment. Several of the underlying holdings are hedge funds which

engage in shorter term trading across asset classes. Market Neutral Funds

achieved performance of +11.5% in 2010.

Marketable Real Assets (2.6% of NAV) contains real asset investments (such as

property and natural resources) which are quoted on a stock market. Liquid

Real Assets achieved performance of +24.9% in 2010.

‘Bonds’ (9.2% of NAV) is comprised of two constituents: (i) High Yield Bonds

and (ii) Corporate Bonds. Returns may be generated from an increased capital

value, coupons as well as currency exposure.

High Yield Bonds (9.2% of NAV) contains investments in Emerging Market

(both sovereign and corporate debt) and other high yield corporate debt. High

Yield Bonds achieved performance of +12.9% in 2010.

Investment Grade Bonds (0% of NAV) contains investments in sovereign

(government) bonds as well as corporate bonds with high credit ratings

(typically at least ‘BBB’ as defined by Standard & Poor’s). Investment Grade

Bonds achieved performance of +1.8% in 2010.

‘Cash’ (9.4% of NAV) is comprised of cash and cash equivalents including

money market/liquidity funds. Cash may be held in currencies other than the

US Dollar. Cash achieved performance of +1.8% in 2010.

Performance

0

50

100

150

200

250

300

Ocean Wilson (Investments) Limited MSCI World (Developed) IndexMSC All Country World Index

Cumulative Returns from Inception

Nov-00 Apr-02 Sep-03 Feb-05 Aug-06 Jan-08 Jun-09 Dec-10

Annual and Cumulative Returns

Annual performance (time weighted return)

Since inception (1 Nov 2000) 2010 2009 2008 2007 2006

Fund performance 122.2% 11.6% 19.0% (27.1)% 16.0% 19.5%

MSCI World (Developed) Index 19.3% 11.8% 30.0% (40.7)% 9.0% 20.1%

MSCI All Country World Index *n/a% 12.7% 34.5% (42.2)% 11.8% 20.8%

Performance Benchmark 53.4% 3.0% 4.0% 6.2% 7.3% 6.8%

* Note: Performance information for the MSCI All Country World Index, which includes Developed, Emerging and Frontier Markets (weighted by marketcapitalisation), is only available from 31 May 2002.


9

Above and left: The 71 ton bollard pull tugboat Andromeda. Wilson Sons

is the largest provider of towage services in Brazil.



10

Excluding cash, the invested portfolio generated a time weighted return of

+13.0% in 2010. Cash represented approximately 9.4% of the portfolio’s

NAV at the end 2010 with an average level of 20.9% throughout the year.

In comparison, the MSCI All Country World Index (includes Developed,

Emerging and Frontier Markets – weighted by market capitalisation) was

+12.7%.

Overall performance was enhanced by top-down asset allocation as compared

to the MSCI All Country World Index. Within the portfolio, 11 out of the 12

sectors generated positive returns with Global Themes (driven by commodity

exposure), Emerging Asian and Market Neutral investments the top three

contributors. Only African investments (1.8% of overall NAV) generated a

negative return due largely to the effect of fees (early stage in the ‘J-curve’) on

the two commitments to private equity funds.

Approximately 33% of performance stemmed from Emerging Markets, 27%

from Developed Markets, 22% from Global Themes and 18% from Market

Neutral funds (see summary of these holdings below). As at 31 December

2010, approximately 10% of OWIL’s NAV was held in Private Assets

(predominantly Emerging Markets private equity limited partnerships) towards

the beginning of their investment lives. The portfolio also benefited from its

considerably underweight exposure to Developed Europe ex UK (4.4% versus

16.5% for the MSCI All Country World Index), which was the weakest

geographical region in 2010.

The top performing investments included several Emerging Market funds:

Pacific Alliance China Land Ltd +50.9%, ARC Capital Holdings Ltd

+30.0%, Neptune Russia & Greater Russia Fund +29.3% and Aberdeen

Global – Asia Pacific +26.8%. Global sector focused funds such as

BlackRock World Mining Trust Plc +43.5% and Phaunos Timber Fund Ltd

+34.3% also posted strong gains. In Developed Markets, the standout

performers were Jupiter European Opportunities Trust Plc +37.2% and

BlackRock UK Emerging Companies Hedge Fund +25.5%.

The top contributors were:

Top Contributors (in USD) Contribution Performance Gain

% % $m

BlackRock World Mining Trust Plc 1.6 43.5 3.5

Findlay Park American Smaller Companies Fund 0.8 22.6 1.8

Jupiter European Opportunities Trust Plc 0.8 37.2 1.8

AR New Asia Fund* 0.6 18.6 1.4

BlackRock UK Emerging Companies Hedge Fund 0.6 25.5 1.4

Aberdeen Global – Asia Pacific 0.6 26.8 1.4

Pacific Alliance China Land Ltd 0.6 50.9 1.3

Capital International Emerging Markets Debt Fund 0.6 11.8 1.2

BlueCrest AllBlue Leveraged Feeder Fund 0.5 11.0 1.2

Neptune Russia & Greater Russia Fund 0.5 29.3 1.1

Total 16.1

Note: * Purchased during 2010.

INVESTMENT PORTFOLIO PERFORMANCE for the year ended 31 December 2010 (excluding cash and cash funds)Time

Portfolio Weighted *MSCI

Weighting Return Return

Sector % % %

North America 11.4 6.5 15.3

Developed Europe ex-UK 4.4 19.4 1.6

UK 6.0 14.7 8.8

Japan 4.0 8.4 15.4

Developed Asia ex-Japan 4.8 16.2 16.9

Emerging Asia 20.1 13.3 19.0

Latin America 3.9 14.2 14.7

Emerging Europe 6.6 18.9 16.7

Africa* 1.8 (6.4) 14.6

Middle East* 1.2 12.8 15.7

Global Themes 14.7 20.3 12.7

Market Neutral 21.1 11.2 3.0

*Notes:

(i) The MSCI EFM Africa Index was launched during 2010 hence the FTSE/JSE Africa Top 40 Index has been used on a one off basis in its place.

(ii) There is no longer an appropriate MSCI Index for the Middle East so the S&P Pan Arab Index is shown instead.

(iii) Market Neutral Funds are compared with the performance benchmark.


11

Above and left: Tecon Salvador in Salvador Bahia. In 2010 volumes at

Tecon Salvador increased 13% to 262,500 TEUs (Twenty foot

equivalent units).



12

Asset Allocation at 31 December 2010

Geographical Distribution at 31 December 2010

Currency Exposure (by denomination) at 31 December 2010

Underlying Liquidity at 31 December 2010

Illiquid 12.9%

Daily 48.4%

Weekly 5.5%

Monthly 25.9%

Quarterly 7.3%

United StatesDollar 84.2%

Singapore Dollar1.9%

Japanese Yen1.7%Pounds Sterling

11.5%

Euro 0.7%

Cash 9.4%

Market Neutral18.4%

Global (Thematic)14.1%North America

9.8%Developed Europe

ex UK 4.3%

UK 5.6%Japan3.6%

Developed Asiaex Japan 4.4%

Emerging Asia18.2%

Latin America3.6%

Emerging Europe6.1%

Africa 1.4%Middle East

1.1%

Private Real Assets(Illiquid) 1.2%

Cash & LiquidityFunds 9.4%

Market NeutralFunds 18.5%

High Yield Corporate 4.0%

Emerging MarketDebt 5.2%Long Only

Equities 37.8%

Marketable RealAssets 2.6%

Long/Short HedgeFunds 12.4%

Private Debt(Illiquid) 0.9% Private Equity

(Illiquid) 8.0%

In terms of negative performance, the most disappointing performance came

from Prusik Asia Fund –9.4% (sold in August), where the manager continued

its poor performance of 2009 and RWC US Absolute Alpha –4.5% which

ended in negative territory against a positive environment for US equities.

ETFS Natural Gas –25.6% (sold in March) was a significant detractor due

mainly to the underlying commodity remaining in contango, a situation which,

given the negative ‘roll yield’, provides a significant headwind for positive

returns. Elsewhere, SR Global – Asia and SR Global – Emerging Markets

were laggards and only just in positive territory despite strong performance

from Asian and Emerging Market equities.


13

Above: A platform supply vessel (PSV) being completed

at our shipyard in Guaruja. At the end of 2010 the

Wilson Sons Ultratug joint venture operated 10 PSV’s.



14

PORTFOLIO ACTIVITY – for the year to 31 December 2010

At the beginning of the year, the portfolio had cash and liquidity funds of

$75.1m. During 2010, excluding transactions relating to cash and liquidity

funds, there were total purchases of $61.4m and total sales of $30.9m. Within

the portfolio’s illiquid investments, there were new commitments to Private

Assets of $20.7m and capital contributions to Private Asset investments of

$15.1m.

Purchases

There were purchases totalling $61.4m during 2010.

New Positions $

AR New Asia Fund 7,500,000

Investec GSF Enhanced Global Energy Fund 6,273,295

QFR Victoria Fund Ltd 5,000,000

Winton Futures Fund 5,000,000

Schroder ISF Emerging Markets Debt Fund 5,000,000

Schroder ISF Global Energy 5,000,000

Prosperity Quest Fund 5,000,000

BlueBay Macro Fund 5,000,000

Prusik Asian Smaller Companies Fund Plc 2,497,909

Jupiter Global India Select Fund 2,000,000

Jupiter Absolute Return Fund 1,810,544

Additions to Existing Investments

Findlay Park American Fund 5,472,637

ARC Capital Holdings Ltd 2,805,178

Atlantis China Fund 2,000,000

SR Global Emerging Markets Fund 905,109

Pacific Alliance China Land Ltd 162,766

61,427,438

New Positions

AR New Asia Fund makes investments in Asian ex-Japan equities via a

long-only absolute return concentrated (c30 stocks) portfolio, supported by a

macro overlay to manage risk. AR Capital was founded in 2005 by Leong

Wah Kheong, formerly CIO for Schroder’s Asia ex-Japan equities for eight

years.

Investec GSF – Enhanced Global Energy Fund was purchased from the

proceeds of the sale from Investec Global Energy Long/Short Fund (market

neutral fund) into a new hedged UCITS III vehicle. The Fund is long-biased but

with downside protection through the use of derivative instruments.

QFR Victoria Fund is a global macro market neutral hedge fund, investing in

fixed income, currencies and credit securities in Emerging Markets.

Winton Futures Fund is a market neutral ‘trend following’ hedge fund,

trading in futures, options and forwards on approximately 100 global equity,

currency, bond commodity and short-term interest rate markets.

Schroder Emerging Markets Debt Absolute Return Fund is a long-only

absolute return market neutral fund investing in Emerging Markets debt

through local and external (USD) cash bonds, with significant thought given to

currency positioning as a meaningful contributor to performance.

Prosperity Quest Fund invests in Russian equities with a bias towards small

and mid-capitalisation companies. The Fund specialises in restructuring and

consolidation opportunities and may have a small percentage invested in

unlisted assets.

Schroder Global Energy Fund is a long-only fund, investing in a

concentrated portfolio of listed energy (oil, gas and coal) equities through both

direct exploration and production companies as well as related energy

services and equipment companies. The portfolio has a high exposure to

mid-capitalisation companies.

BlueBay Macro Fund – is a global macro absolute return hedge fund,

investing in fixed income, currency, equity and other liquid markets, typically

with a high exposure to Emerging Markets.

Jupiter Global India Select Fund invests across market capitalisations in a

portfolio of Indian equities. The focus in on under-researched companies in

the mid-capitalisation space.

Prusik Asian Smaller Companies Fund was purchased using approximately

half of the proceeds from the sale of the Prusik Asia Fund. The transaction

reflects the manager’s better track record in the Smaller Companies Fund and

higher conviction ideas.

Jupiter Absolute Return was purchased with proceeds from the sale of

Jupiter Financial Opportunities Fund. The new UCITS III Fund is an

unconstrained fund, investing across asset classes with a bias towards equities.

Given the manager’s area of expertise, equities in financials may constitute a

significant part of the portfolio. It is anticipated that the returns will offer

greater downside protection and exhibit lower volatility than the Jupiter

Financial Opportunities Fund.


15

Shipbuilding and logistic operations.



16

Additions to Existing Investments

Findlay Park American Fund was increased to reflect the Investment

Manager’s high conviction in this long-term holding and some selective value

in a largely out of fashion stock market.

ARC Capital Holdings Ltd was increased to take advantage of a significant

discount to NAV (approximately 18%) and greater exit visibility on a maturing

portfolio. Furthermore, one (profitable) follow-on investment was made ahead

of the January 2011 tender offer where the Company made a one-off

distribution equal to 10% of NAV.

Atlantis China Fund – tactical increase of exposure to high conviction China

fund following a weak local market in 2010.

Pacific Alliance China Land Ltd was increased ahead of the October tender

offer where the Company made a third (and final) distribution equal to 6% of

NAV. The Investment Manager has participated in all three of these tender

offers, purchasing an equal amount of shares in advance of the tender and

then tendering these shares at NAV – this has proved a profitable strategy.

SR Global – Emerging Markets was increased with proceeds from the sale of

SR Phoenicia following disappointing performance despite significant

crossover of ideas with the Emerging Markets Portfolio.

Switches

There were three switches during 2010.

Lansdowne UK Equity Fund Ltd ($10.6m) was switched from the GBP class

to the USD (hedged) class.

Prior to its sale, Prusik Asia Fund ($4.8m) was switched at the start of 2010

from the USD class to the SGD class, reflecting the manager’s positive outlook

for Asian currencies in general and more specifically the Singapore Dollar.

RWC Biltmore (hedge fund, $2.9m) was switched into RWC US Absolute

Alpha Fund, a UCITS III fund with a very similar portfolio. The RWC US

Absolute Alpha Fund benefits from daily liquidity versus monthly for RWC

Biltmore.

Sales

There were sales with proceeds totalling $30.9m during 2010.

Commitments

There were five new commitments to illiquid private limited partnerships in

the year:

$

Avigo SME Fund III, LLC 5,000,000

Capital International Private Equity Fund V, LP 5,000,000

China Harvest Fund II, LP 5,000,000

Greenspring Global Partners IV, LP 5,000,000

L Capital Asia Private Investors Offshore, LP 4,650,000

Total 24,650,000

Avigo SME Fund III, LLC invests in Indian Small and Medium Enterprises with

a focus on the industrial sector.

Capital International Private Equity Fund V, LP makes private equity

investments in market-leading local companies and well-positioned exporters

across the global emerging markets. This was a secondary transaction where

a $5m commitment was acquired from an existing Limited Partner. The price

paid was a 12.5% discount to the drawn portfolio’s valuation.

China Harvest Fund II, LP provides growth capital to leading mid-market

companies (typically with top five market positions) in mainland China, Hong

Kong, Macau and Taiwan.

Greenspring Global Partners IV, LP is a venture capital fund of funds,

aiming to provide access to top-tier funds, principally in the United States. In

addition, approximately 25% of commitments will be used to make direct

investments in private companies.

L Capital Asia Private Investors Offshore, LP is a private equity fund

sponsored by French luxury conglomerate, the LVMH Group, to provide

growth capital through minority stake investments in Asian ‘aspirational’

brands (affordable alternatives to luxury brands), directed at the growing

middle class and discretionary consumption.

Market outlook

Economists are anticipating a two tier economy in 2011. The International

Monetary Fund is forecasting economic growth of 2.2% in the developed

economies and 6.4% in the developing world with world GDP expanding at

4.2% overall. It is an environment where the developing world is doing the

bulk of the ‘heavy lifting’. For example, car sales and oil imports in these

economies have exceeded the developed world for the first time.

Although there have been some muted signs of growth in the US, it has tended

to be focused on technology and productivity improvement and has not

necessarily been beneficial for job creation. The ongoing deleveraging cycle in

the West is a huge headwind for growth. US total debt as a percentage of GDP

peaked during the first quarter of 2009 at 373% (its previous peak being 300%

in 1933). This exponential rise in total outstanding debt in the US economy is

clearly unsustainable and correcting it will be a serious constraint on their

economic growth prospects. The other central issue undermining growth in the

West is the collapse in the velocity of money. Despite the scale of the increase

in the monetary base, banks have been guilty of ‘monetary constipation’, sitting

on an improved reserve position with no benefit to the real economy. As a result

of the two tier nature of the world economy, governments and central banks are

pursuing differing agendas with the West keen to avoid slumping into Japanese

style deflation while policy makers in the developing world are confronted by

either rising inflationary pressures or unwanted strength in their currencies,

which threatens to undermine their competitiveness.

Following the recovery in the capital markets from the 2008 crisis, there

remains significant unease amongst investors about the lasting legacy of the

policy response to the crisis and the deep rooted structural challenges many

economies are facing. ‘Quantitative Easing’ has succeeded in supporting asset


17

prices but it defies investor logic to assume the creation of excess liquidity will

bring structural benefit to problems created by an excess of liquidity. The

unintended consequences and distortions caused by current policy settings

will become clearer over time but there can be little doubt that they will occur.

Much of the developed world has to confront a poor demographic profile and

deteriorating dependency ratios as fewer people in work support increasing

numbers of people who are not. In terms of investment strategy, the ‘big picture’

still favours the Emerging Markets which have superior growth prospects and a

lower debt burden at both public and private levels. However, the case for their

capital markets outperforming those of the developed world is not as clear cut

in 2011 as it has been through much of the last decade.

For one thing, inflation is increasingly a concern for many Emerging Markets

as a consequence of rapid GDP growth, strong capital inflows and higher food

and raw material prices. In India, for instance, core inflation is running at

8.5% and food price inflation at close to 17%. The Food and Agriculture

Organisation price index is at an all-time high following a very strong increase

in a range of agricultural commodities resulting from weather related crop

losses, rising demand and high input costs such as fertiliser. In China,

inflationary pressures are also returning, exacerbated by an artificially low

level for the currency and wage settlements are rising. Ultimately, it is hard to

see how the Chinese and other Asian economies with US Dollar pegs can

avoid allowing their undervalued currencies to float freely. Any tightening of

monetary policy has historically been negative for Emerging Markets.

Emerging Market equities tend to be much more closely correlated with their

fixed income markets and therefore a rise in bond yields is likely to be more

threatening than it would be in stock markets in more mature economies

where a rise in bond yields would signal improved economic vitality.

Emerging Markets are much more fashionable with investors than they were a

decade ago and capital flows from both institutional and retail investors have

grown markedly. This greater weight of investor exposure also makes them

more vulnerable to any potential setbacks. By contrast, the US stock market

has recently experienced the worst decade in its history with the annualised

real rate of return in the ten years to March 2010 being -6%. In this context,

US fund flows have seen high inflows into bond funds and Emerging Market

equity funds, largely at the expense of neglected domestic equities. Despite

the softness of the US economy and a consumer undermined by poor job

prospects and a weak housing market, Corporate America is in strong shape.

Profit margins for the S&P 500 Index exceeded 8% for the first time in over

30 years. Balance sheets are strong and many US corporations enjoy

dominant global franchises.

For much of 2010, capital markets were focused on the significant strains

evident within the Euro project and the peripheral European countries in

particular stumbled under the weight of their debt burden. These concerns are

still likely to be high on the list of investor unease in 2011. What is apparent,

however, is a divergence within Europe. Germany for instance, is experiencing

significant strength in its industrial sector buoyed by capital good sales to

the Emerging Markets. Unemployment is now at its lowest level since

re-unification and consumer sentiment has recovered. The German IFO

business survey, which reflects general business confidence, is at its highest

level since it was started in 2000. Elsewhere in Europe the picture is not as

bright as policy makers seem reluctant to grapple with serious structural

negatives such as deteriorating dependency ratios and an ‘entitlement culture’

that seems to be on a collision course with reality.

Notwithstanding the complexity of the current investment landscape and

conflicting policy agendas, there is still a strong central case to be made for a

diversified portfolio of international equities. With effectively zero available on

cash deposits and extremely low nominal bond yields (close to negative in

real terms), the balance of risk/reward favours shares. Analyst forecasts for the

MSCI (Developed) World Index suggest a forward price earnings multiple of

12x and a price to book ratio of less than two. These are amongst the lowest

valuations seen in the last 20 years. Furthermore, with dividends in many

cases exceeding bond yields, shares are a competitive asset as a source of

income as well as having long-term appreciation prospects. Interest rates at

either the short or long end would have to spike upwards much more than

seems likely in the current scenario to undermine this fundamental valuation

support for equities.

At the time of writing, recent headlines have been dominated by events in the

Middle East. Unrest against the long-term undemocratic regimes originated

from widespread concerns including food price inflation, unemployment and

corruption, with the people of Tunisia and Egypt and subsequently Bahrain,

Yemen and Libya attempting to enact political change to differing degrees.

These popular uprisings could represent the vanguard of democracy in a

volatile region long starved of political freedoms. Alternatively, it remains to

be seen to what extent power vacuums will be filled by religious extremists.

The impact on risk assets has not been inconsiderable, with oil prices spiking

to two year highs and equities, especially Emerging Markets, generally

retrenching. Given the portfolio’s relatively low geographic exposure to the

region, and far greater exposure to oil related entities, the direct impact on

portfolio performance should be relatively muted. However, the Investment

Manager is conscious that further geopolitical tensions have the potential to

cause oil prices to rise further and, should they approach the highs of 2008,

could be capable of destabilising a fragile global economic recovery.

Hanseatic Asset Management LBG

February 2011


Wilson Sons Limited Operating Review

18

We have summarised the following highlights from the Wilson Sons 2010

Earnings Report released on 25 March 2011. Wilson Sons represents one

segment for IFRS 8 segmental reporting purposes in the Ocean Wilsons

Holdings Limited accounts. The full report is available on the Wilson Sons

Limited website: www.wilsonsons.com:

Cezar Baião CEO of Operations in Brazil said:

“We are pleased to deliver another strong year to our shareholders. Wilson,

Sons’ record investment of US$190.3 million in 2010 demonstrates our

commitment to developing port, maritime, and logistics infrastructure for the

service of our clients. The Company is experiencing outstanding demand in

the areas of international trade, oil and gas, and the Brazilian domestic

economy.

In 2011, we are expanding our container terminal in Salvador and doubling

our shipbuilding capacity in Guarujá, together with the on-going fleet

expansion in Offshore and Towage. As such, we have unprecedented

confidence that Wilson, Sons’ investments will set the stage for a successful

future.”

Net Revenues

Port Terminal revenue for the year is up 30% due to higher volumes, the

strong Brazilian Real stimulating higher-yielding imports which, in turn,

favoured warehousing revenues and increased activity at Brasco. Towage

revenue grew 7%, with strong demand for special operations which accounted

for 16% of towage revenue in the year. Offshore revenue is down 27% as a

result of the formation of WSUT joint venture in May 2010 and the migration

of 4 vessels from spot market operations to long-term contracts.

Capital Expenditure

The Group invested record capital expenditure in the year. The capital

expenditure is a result of the Company’s fleet expansion in offshore and

towage, new equipment for Tecon Rio Grande, the expansions of both Tecon

Salvador and the shipyard in Guarujá. Equipment for port terminals included 2

new ship-to-shore cranes (portainers) and 4 rubber-tyre gantry cranes

(transtainers) at Tecon Rio Grande, and the aforementioned expansion of

Tecon Salvador. Equipment was also purchased for logistics to attend new

client in-house operations.

Port terminals

Wilson Sons port terminals operates two container terminals, located in Rio

Grande, Rio Grande do Sul and Salvador in Bahia, Brazil (Tecon Rio Grande

and Tecon Salvador). Both terminals, offer assistance in port operations for

loading and unloading of vessels, storage, and auxiliary services. Wilson Sons

also operates Brasco, located in Rio de Janeiro, which provides support

services to the oil and gas industry

Total port terminal revenue grew 30% from US$175.4 million to US$228.0

million due to increased container volumes and revenue from Brasco.

Revenue also benefited from an improved container sales mix and increased

warehousing revenues. Brasco had a particularly strong year with revenue

growing 84% to US$49.2 million (2009: US$26.7 million). Revenue growth

reflects the higher demand for auxiliary services, such as warehousing,

transportation, waste management, container rental, and utilisation of

manpower and equipment. The Company experienced strong demand at all

our facilities in Rio de Janeiro, Niterói, and Vitória.

Container terminal volumes for the year were 5% higher at 928,700 TEUs

(Twenty foot equivalent units) benefiting from the strong domestic economy

and growth in cabotage volumes. Deep sea volumes in the period were lower

due to the negative effect of the strong Brazilian Real on our predominantly

export-driven ports although this was mainly reflected in a fall in low value

empty container movements. Imports of parts and machinery, chemicals, and

plastics at Tecon Rio Grande partially offset the fall in export volumes at this

terminal. The Full-to-Empty container mix improved with full containers up

15.1% for the year. Warehousing revenues benefited from greater import

volumes.

Volumes at Tecon Salvador were up 13% at 262,500 TEUs with increases in

transhipment, inland navigation and cabotage volumes. Chemicals, ores,

grains, pulps, and rubber were particularly strong.

The increase in revenue was reflected in increased EBITDA which improved

31% to US$76.3 million from US$58.3 million. Within this Brasco EBITDA

improved 63% to US$14.9million (2009: US$9.1 million).

Towage

Wilson Sons offers harbour towage, ocean towage, salvage support and

maritime support to the offshore oil and gas industry.

Towage revenues increased 7% to US$156.0 million from US$145.7million

helped by better volumes in both harbour towage and special operations. The

Company continues to focus on developing our higher margin special

operations business which accounted for 16% of towage revenue in the year

(2009: 14%). Special operations are mainly support to offshore oil & gas

platforms and FPSO (Floating, Production, Storage and Offloading vessels)

construction. Special Operations accounted for 35% of Towage EBITDA in the

year (2009: 25%).

We continue to invest in renewing and expanding our fleet with the addition

of 5 tugboats during the year. (Lyra, Regulus, Sculptur, Carina, and Vela)

Currently, the company has 3 tugboats in different stages of construction at

our shipyard in Guarujá.


19

Offshore

Through our 50/50 joint venture Wilson, Sons Ultratug (WSUT),Wilson Sons

operates platform supply vessels (PSVs), to transport equipment and supplies

to and from offshore oil and gas installations.

The Wilson, Sons Ultratug joint venture results are proportionally consolidated

since the formation of the joint venture in May 2010. Prior to this the Group

reported 100% of our subsidiary results.

Offshore revenue at US$28 million decreased 27% compared to prior year

(2009: US$38.1 million) due to the formation of the joint venture and the

migration of four PSVs operating in the high value spot market to long-term

contracts with Petrobras during the year.

Operating profit is down 53% for the year to US$6.5 million (2009: US$13.7

million) because of the joint venture formation, lower spot market rates, the

migration of four vessels from spot contracts to 8-year, long-term contracts

with Petrobras (long-term contracts bring guaranteed revenue but carry lower

daily rates than riskier spot market rates). Operating costs were adversely

impacted by higher depreciation due to the expansion of our fleet and higher

personnel costs driven by collective labour agreements and increased

headcount.

The Groups shipyard delivered two new PSVs during the year (Fulmar and

Talha-Mar). At the end of 2010 the joint venture operated 10 PSVs of which 9

were on long-term contract to Petrobras. The PSV Torda was delivered in

March 2011 and the company has a further 3 PSVs in different stages of

construction at the Wilson, Sons Guarujá Shipyard.

Shipyards

Shipyard revenues were up 58% in the year as a result of faster build

programs and completion of higher specification vessels during 2010. EBITDA

at US$ 6.0million was US$3.8 million lower than 2009 (US$9.8 million)

principally due to higher start-up costs associated with the new shipyards in

Guarujá and Rio Grande.

Following the formation of the WSUT joint venture, 50% of shipyard

construction for WSUT is treated as third-party revenues in the Wilson Sons

Limited accounts with the remaining 50% treated as fixed asset investment.

Any profits generated by the shipyard relating to the 50% treated as fixed

asset investment is considered intercompany and therefore eliminated on

consolidation.

All tugboats constructed for Wilson, Sons towage business are considered

intercompany and recorded at cost in the consolidated balance sheet.

Ship agency

Wilson Sons acts as the ship owners’ representative as well providing the

following services to ship owners: commercial representation, cargo

documentation, container control and vessel support.

Ship Agency revenues increased 16% to US$17.6 million compared to 2009

(US$15.2 million) as a result of strong volumes. The number of vessel calls

attended increased 11% to 7,258 with increases also in the number of bill of

ladings issued and containers controlled. Volumes benefited from both higher

domestic and international shipping demand.

EBITDA margins decreased as a result of higher personnel costs and the

strength of the Brazilian Real against the US Dollar. A stronger Brazilian Real

erodes ship agency margins as the 100% of costs are Real-denominated and

the majority of revenues are USD-denominated.

Logistics

Wilson Sons develops and provides differentiated logistics solutions for the

management of the supply chain of our clients and the distribution of

products, including a number of logistics services, such as, storage, customs

storage, distribution, highway transportation, multimodal transportation and

NVOCC – Non Vessel Operating Common Carrier.

Revenue from our logistics business increased 35% to US$102.4 million from

US$75.8million principally due to new operations in the steel, mining and

pulp and paper industries.

Logistics EBITDA improved 86% to US$13.1 million (2009: US$7.1 million)

due to the ramp up in new operation volumes and improved performances

across the in-house logistics operations. The Company’s bonded-warehouse

operations in Santo André (SP) performed particularly strong benefiting from

robust import volumes driven by the strong Brazilian Real.


20

Directors and Advisers

Directors

J F Gouvêa Vieira* (Chairman)

W H Salomon* (Deputy Chairman)

K W Middleton

C F A Cooper*

A Rozental*

*Non-executive

Secretary

Malcolm S Mitchell

Profiles of Non-executive Directors

Dr J F Gouvêa Vieira is aged 61 and joined the Group in 1991. He is the

managing partner of the Brazilian law firm of Gouvêa Vieira Advogados.

He is a member of the Board of Concremat Engenharia, PSA Finance Brasil,

International Meal Company, Wilson Sons Limited and a member of the

consultative Board of PSA Peugeot Citroen do Brasil, Vio;y & Co (New York)

and a number of other Companies.

W H Salomon is aged 53 and joined the Group in 1995. He is senior partner

of Hansa Capital Partners LLP. He is also a non-executive director of Hansa

Trust PLC, Wilson Sons Limited and New India Trust.

C F A Cooper is aged 68 and joined the Group in 1994. He was a partner of

Conyers, Dill & Pearman. He is also a Director of Stevedoring Services Limited

and Bermuda Cablevision Limited.

Mr Rozental is aged 65 and is the founding partner of Rozental & Asociados.

He is a Director of Wilson Sons Limited, Chairman of the Board of Directors of

ArcelorMittal Mexico and an independent Director of ArcelorMittal Brazil. He

serves on the advisory boards of Kansas City Southern de México, EADS de

México, Toyota de México and is an operating partner of Advent International

Private Equity.

Bermuda Office

PO Box HM 2250

504 International Centre

Bermudiana Road

Hamilton HM JX

Bermuda

Website: www.oceanwilsons.bm

Brazilian Business Website

www.wilsonsons.com.br

Registered Office

PO Box HM 1022

Clarendon House

Church Street

Hamilton HM DX

Bermuda

Registrars

Codan Services Limited

Clarendon House

Church Street

Hamilton HM 11

Bermuda

UK Transfer Agent

Capita Registrars

The Registry

34 Beckenham Road

Kent BR3 4TU

Ocean Wilsons Dividend Address

Ocean Wilsons Dividend Election

Capita Registrars

The Registry

34 Beckenham Road

Beckenham

Kent BR3 4TU

Auditors

Deloitte LLP

2 New Street Square

London EC4A 3BZ

Bankers

Deutsche Bank International Limited

Jersey

Investment Managers

Hanseatic Asset Management LBG

Guernsey, Channel Islands


21

Report of the Directors

The Directors submit herewith their Report and Accounts for the year ended

31 December 2010.

The Group accounts, presented under International Financial Reporting

Standards (IFRS), comprise the Consolidated Statement of Comprehensive

Income, Consolidated Balance Sheet, Consolidated Statement of Changes in

Equity, Consolidated Cash Flow Statement and the related notes 1-39.

Profits and Dividends

As permitted by Section 84(1A) of the Bermuda Companies Act 1981 the

Group’s accounts have been drawn up in accordance with International

Financial Reporting Standards.

The Group’s profit after tax on ordinary activities attributable to equity holders

of the parent amounted to US$56,879,000 (2009: US$70,200,000).

An interim dividend of 4.0c (2009: 4.0c) gross per share was paid on

1 October 2010 and the Directors are recommending the payment of a final

dividend for the year of 38.0c (2009: second interim dividend 38.0c) gross

per share. The final dividend will be paid on 31 May 2011 to all shareholders

who are on the register at close of business on 13 May 2011.

Principal Activities

The Group’s principal activities during the year were the provision of maritime

and logistics services in Brazil and the holding of investments. Details of our

activities are set out in the Chairman’s statement and Wilson Sons Limited

operating review on pages 1 to 19.

Directors

The present Members of the Board are as shown on page 20.

In accordance with the Company’s bye-laws, Mr K Middleton and

Mr C F A Cooper will retire at the next annual general meeting and, being

eligible, offer themselves for re-election. The Directors who held office at

31 December 2010 had the following interest in the Company shares:

Interest 2010 2009

C F A Cooper Beneficial 42,900 42,900

J F Gouvêa Vieira Beneficial 136,600 136,600

K W Middleton Beneficial 10,000 10,000

W H Salomon* Beneficial 4,659,349 4,659,349

*Additional indirect interests of W H Salomon in the company are set out in substantial

shareholdings below.

Service Contracts

Regarding the Directors proposed for re-election at the Annual General

Meeting, Mr K Middleton has terms of service which can be terminated by the

company on not less than twelve months notice in writing and by the Director

on not less than six months notice in writing. There is no service contract

between Mr C F A Cooper and the company.

Employees

The average number of persons, including Directors, employed by the Group

was 4,936 (2009: 4,447).

Charitable and Political Donations

During the year Group made charitable donations of US$105,000 (2009:

US$102,000) principally to social programmes in Brazil. There were no

political contributions in either year.

Long-term incentive plan

In March 2007, the Finance Committee introduced a cash settled long-term

incentive plan for senior management with rewards linked to the performance

of the Ocean Wilsons Holdings Limited share price. The plan was approved

at the Special General Meeting held on 19 April 2007. An accrual of

US$6,676,000 (2009: US$7,035,000) has been included in the 2010

accounts for benefits accruing under the plan.

On 9 April, 2007, the boards of Ocean Wilsons Holding Limited and Wilson

Sons Limited approved a stock option plan which allows for the grant of

phantom options to eligible employees selected by the Wilson Sons Limited

Board. The options will provide cash payments, on exercise, based on the

number of options multiplied by the growth in the price of a Wilson Sons

Limited Brazilian Depositary Receipt “BDR” between the date of grant (the

Base Price) and the date of exercise (the “Exercise Price”). The plan is a

Brazilian Real denominated scheme. An accrual of US$23,795,000

(2009: US$10,591,000) has been included in the 2010 accounts for benefits

accruing under the plan.

Auditor

Deloitte LLP have expressed their willingness to continue in office as auditor

and a resolution to reappoint them under the provisions of Section 89 of the

Bermuda Companies Act 1981 will be proposed at the forthcoming Annual

General Meeting.

Substantial Shareholdings

As at 16 March 2011 the Company has been notified of the following

holdings of its shares, in excess of 3% of the issued ordinary share capital:

Name of holder Number of shares % held

Hansa Trust PLC 9,352,770 26.4

Nicholas B Dill Jnr and Codan Trustees (BVI) Limited 8,364,113 23.6

Utilico Emerging Markets Utilities Limited 3,183,838 9.0

Montanaro Asset Management 1,426,500 4.0

The Company has been advised that Mr W H Salomon and Mrs C A Townsend

are interested in the shares registered in the name of Nicholas B Dill Jnr and

Codan Trustees (BVI) Limited.

The Company has also been advised that Mr W H Salomon has an interest of

26.4% and Mrs C A Townsend an interest in 25.9% of the voting shares of

Hansa Trust PLC.


22


Contracts and agreements with substantial shareholders

No contracts existed at the end of the year in which a substantial shareholder

of the Company is or was materially interested.

Corporate Governance

The Board has put in place corporate governance arrangements which it

believes are appropriate for the operation of your Company. The Board has

considered the principles and recommendations of the 2008 Combined Code

on Corporate Governance (“Combined Code”) issued by the Financial Reporting

Council and decided to apply those aspects which are appropriate to the

business. This reflects the fact that Ocean Wilsons Holdings Limited is an

investment company incorporated by an act of parliament in Bermuda with

significant operations in Brazil. The Company complies with the Combined

Code where it is beneficial for its business to do so and has done so

throughout the year but as noted below, it does not fully comply with the

Combined Code. The position is regularly reviewed and monitored by the

Board.

The Board

The Board currently comprises the Chairman, Mr J F Gouvêa Vieira, Deputy

Chairman Mr W Salomon, two independent non-executives, Mr A Cooper and

Mr A Rozental and one executive Director, Mr K Middleton. Mr Cooper and

Mr Rozental are considered by the Board to be independent under the UK

Combined Code. Although Mr Cooper has served as a Director of Group

Companies for more than nine years he has been assessed as independent by

virtue of his personal characteristics, experience and performance. The

Directors’ Biographies appear on page 20. The Combined Code states that the

board should appoint one independent director to be the senior independent

non-executive director. Due to the small size of the Board and the fact that

Ocean Wilsons Holdings Limited is a holding Company, the Board does not

consider it appropriate to appoint a senior independent non-executive director.

If a shareholder feels it is inappropriate to relay views through the Chairman

or Executive Director, all non-executive Directors are available.

All Directors are subject to election by shareholders at the first AGM following

their appointment to the Board and no more than one third of the Board are

subject to re-election at each AGM. The Board is proposing at the forthcoming

AGM to amend the Company’s articles to ensure that Directors are subject to

election by shareholders once every three years. Directors serving more than

nine years are not subject to annual re-election as your Board considers

continuity and knowledge of the Company’s investments and business

acquired over time is of great value. Mr K Middleton and Mr C F A Cooper, are

offering themselves for re-election at the next AGM. The Board considers on a

regular basis how to refresh itself.

Non-executive Directors hold letters of appointment. The other commitments

of Directors appear on page 20 as part of their biographies and the Board is

satisfied that these commitments do not conflict with their ability to carry out

effectively their duties as Directors of the Company.

The division of responsibilities between the Chairman and the Executive

Director has been clearly established, set out in writing and agreed by the

Board. The Group does not have a Chief Executive.

The Board has appointed an Executive Director, Mr Keith Middleton to

administer the Holding Company.

Our maritime services subsidiary, Wilson Sons Limited (an autonomous listed

company) is supervised by the Board of Wilson Sons Limited who have

appointed Mr Cezar Baiao as Chief Executive to run the business. The Chief

Executive in turn delegates responsibility to senior executives, in particular

strategic business unit directors. Ocean Wilsons Holdings Limited manages its

interest in Wilson Sons Limited through the appointment of three Ocean

Wilsons Holdings Limited Directors as Non-Executive Directors of Wilson Sons

Limited, (presently Mr J F Gouvêa Vieira, Mr W Salomon and Mr A Rozental)

voting on matters requiring Wilson Sons Limited shareholder approval and the

relationship agreement between Ocean Wilsons Holdings Limited and Wilson

Sons Limited signed following the listing of Wilson Sons Limited on the Sao

Paulo and Luxembourg Stock Exchanges. The relationship agreement details

areas of co-operation between Ocean Wilsons Holdings Limited and Wilson

Sons Limited in meeting accounting, reporting and compliance requirements

for both companies.

The Ocean Wilsons Holdings Limited Board has a formal schedule of matters

specifically reserved for its attention. As previously stated autonomy is given

to the Wilson Sons Limited Board to supervise the Wilson Sons Limited

business and decisions taken by the Wilson Sons Board do not require

ratification by the Board of Ocean Wilsons Holdings Limited. The schedule of

matters reserved for the Board of Ocean Wilsons Holdings Limited includes:

• Determine the overall strategy of the Group

• Establishing the finance committee and their terms of reference

• Determining the responsibilities of the Chairman and Directors

• Approving changes to the capital structure of the Company or other

matters relevant to its status as a listed Company

• Approving significant matters relating to capital expenditure,

acquisitions and disposals and consideration of significant financial

matters outside the Wilson Sons Limited Group

• Appointment of Directors to Ocean Wilsons Holdings Limited and Ocean

Wilsons Investments Limited

• Appointment and removal of the Company Secretary

• Appointment and removal of executives

• Approval of annual and interim reports

• Approving any interim dividend and recommending the final dividend

to shareholders

• Appointment of financial advisor or broker

• To vote the shares in Wilson Sons Limited on matters presented to

shareholders for shareholder approval

• To approve changes in Wilson Sons Limited auditor or accounting

policies

The Board of Ocean Wilsons Investments Limited is currently constituted by

the same Directors as the Board of Ocean Wilsons Holdings Limited. The

Board delegates authority to run the investment portfolio held by Ocean

Wilsons Investments Limited to the investment manager within certain

guidelines agreed with the Board. The Board of Ocean Wilsons Investments

Limited has a formal schedule of matters specifically reserved for its attention

which include:

• Appointment, removal and terms of an investment manager

• Determine investment guidelines and restrictions in conjunction with

the investment manager

• Review the performance of the investment manager

• Approve of the interim and annual accounts for Ocean Wilsons

Investments Limited

• Approving any dividends

The Company has a procedure in place by which Directors can seek

independent professional advice at the Company’s expense if the need arises.

The Board has full and timely access to all relevant information to enable it to

perform its duties. The Executive Directors are responsible for advising the Board

on all corporate matters. Each Director has access to the advice and services of

the Company Secretary Mr M Mitchell and the Executive Director.

During 2010 five scheduled meetings of the Ocean Wilsons Holdings Limited

Board were held at different locations including one telephone Board meeting.

Details of attendance at Board meetings and meetings of the Board committees

are set out below. In addition to scheduled Board meetings if matters arise at

short notice requiring urgent attention a telephone Board meeting is arranged.

Directors’ attendance at Board and Finance Committee meetingsFinance Committee

Board Meetings Meetings

Director attended attended

Mr J F Gouvêa Vieira 5 3

Mr W Salomon 5 3

Mr A Cooper 4 3

Mr K Middleton 5 3

Mr A Rozental 4 3

Mr F Gros 1 2

The formal agenda for each scheduled Board meeting is set by the Chairman

in consultation with the Executive Director. The Board of Ocean Wilsons

Holdings Limited is invited to attend Wilson Sons Limited Board meetings

where appropriate to receive operational updates, including one meeting a

year in Brazil where the Board of Ocean Wilsons Holdings Limited is invited to

attend the Wilson Sons Limited Board meeting to meet business unit directors

and receive detailed management reports on the Brazilian business.

The non-executive directors also meet informally, without any executives

present to discuss matters in respect of the business.

All new Directors receive an induction on joining the Company. This covers

such matters as strategy, operation and activities of the Group and corporate

governance matters. Site visits and meetings with senior management are also

arranged. The Board as a whole visits an operational site once a year.

Directors are encouraged to visit other sites. Directors are also provided with

industry, legal and regulatory updates.

The Company has directors and officers insurance in place.

The Board has in place a procedure for the consideration and authorization of

conflicts or possible conflicts of interest with the Company’s interests annually.

If a Director has a conflict of interest, unless requested to remain, he leaves

the meeting prior to discussion and determination of such matters by the

other Directors.

Board Evaluation

The Board undertakes an annual formal performance evaluation for the Board

and individual Directors. The process involves completion of internally

prepared questionnaires. The Chairman discusses their responses with each

Director and then reports the results of the process to the Board which

discusses the results, highlighting any areas for improvement.

Board Committees

The Board has established a finance committee which has formal terms of

reference approved by the Board and which are reviewed on an ongoing basis

by the Board. The committee’s terms of reference are available at the

Company’s registered office. During 2010 the finance committee replaced the

previously separate audit and remuneration committees. The Chairman of the

committee is the Board Chairman, Mr J F Gouvêa Vieira. Due to the size of the

Board, the Board considers the Chairman to be the most appropriate person to

chair the finance committee.

The Combined Code states there should be a board nomination committee.

The Board does not have a separate nomination committee as the identification

and appointment of a new Board member is a matter for the full Board. The

Board reviews Board composition on an ongoing basis and regularly considers

whether any skill gap exists. Any new appointments to the Board will be

considered in this context. Any Director may suggest a person to be appointed a

non-executive director of the Company. The procedure to be followed is:

(a) The C.V. and qualifications of the candidate for the position will be

submitted to the Chairman who will discuss the proposal with at least

two other directors.

(b) The candidate will be interviewed by the Chairman, sponsor and at

least one other director.

(c) If thought fit a resolution will be submitted to the Board for the

appointment of the candidate.

The Board will consider using external consultants in appointing Directors if

necessary.


23

Finance Committee report

The finance committee comprises all non-executive Directors, two of whom

are considered by the Board to be independent. The Board is satisfied that two

Directors, Mr Salomon, and Mr Rozental have recent and relevant financial

experience as all have served on the audit committees of other listed

companies. Mr Salomon also has considerable experience in finance and

investment banking.

The finance committee met three times in 2010 (either as the finance

committee or audit committee). At the request of the finance committee the

Executive Director, the Chief Executive of Wilson Sons Limited and the Finance

Director of Wilson Sons Limited attended each of these meetings. The external

auditors attended one meeting.

The finance committee meets with the external auditor without any executives

present.

The Combined Code states that the Company Chairman should not be the

Chairman of the finance committee. The Board does not consider it

appropriate for the committee to be chaired by a senior independent Director

due to the size of the Board and so the committee is chaired by the Chairman

of the Board Mr J F Gouvêa Vieira. The committee has defined terms of

reference which are available at the company’s registered office. The principal

responsibilities of the committee are:

• to review the integrity of the interim and full year financial statements

of the Company reviewing significant financial reporting judgements

contained in them;

• to review the Company’s internal control and risk management systems;

• to make recommendations to the Board, for it to put to the

shareholders for their approval in general meeting, in relation to the

appointment, re-appointment and removal of the external auditor and

to approve the remuneration and terms of engagement of the external

auditor;

• to review and monitor the external auditor’s independence and

objectivity and the effectiveness of the audit process, taking into

consideration relevant professional and regulatory requirements;

• to consult with the Group’s auditors and, where necessary the auditors

of the subsidiary companies, regarding any matters arising in the course

of the annual audit or interim review which should be brought to the

attention of the Board;

• to monitor the Group’s risk exposure;

• determine the remuneration for all executives, the Chairman and

non-executive Directors;

• determine the level of awards made under the Company’s long-term

incentive plan and performance conditions and vesting periods that

apply; and

• determine bonuses payable under the Company Bonus scheme.

To fulfil its responsibility regarding the independence of the external auditors,

the finance committee reviewed:

• the external auditors plan for the current year, noting the role of the

audit partner, who signs the audit report and who, in accordance with

professional rules, has not held office for more than five years and any

changes in key audit staff;

• a report from the external auditors describing their arrangements to

identify, report and manage any conflicts of interest;

• the overall extent of non-audit services provided by the external

auditors, in addition to approving the provision of significant non-audit

services by the external auditors.

In addition the Group does not currently employ any former external audit

staff in key management positions.

Directors’ fees are set out within limits set in the Company’s Articles of

Association. The present limit is US$400,000 in aggregate per annum and the

approval of shareholders in a General Meeting would be required to change

this amount.

The Board of Wilson Sons Limited is responsible for all remuneration matters

relating to Wilson Sons Limited and its subsidiaries. Mr Gouvêa Vieira,

Mr Salomon and Mr Rozental receive Directors’ fees from Wilson Sons Limited

in addition to their fees as Directors of Ocean Wilsons Holdings Limited.

Internal Controls

The Board is responsible for the system of internal control and reviewing its

effectiveness. The internal controls are designed to cover material risks to

achieving the Group’s objectives and include business, operational, financial

and compliance risks. These controls have been in place throughout the year

and up to the date of the approval of the annual report. The internal controls

are designed to identify, evaluate and manage rather than eliminate risk of

failure to meet business objectives. The internal control process distinguishes

between the Parent Group and the principal operating subsidiary, Wilson Sons

Limited which is managed by an autonomous Board.

Wilson Sons Limited is listed on both the Sao Paulo Stock Exchange

“BOVESPA” and Luxembourg Stock Exchange, whose rules are different to the

London Stock Exchange. The company’s internal control procedures whilst

sufficient for the Board of Wilson Sons Limited to identify, manage and control

the principal risks, may differ from the requirements of the Turnbull

Committee. The Board of the principal operating subsidiary is responsible for

identifying key business risks and establishing and reviewing internal control

procedures.

The Board reviews the need for an internal audit department annually and

considers that the Parent Group is not sufficiently large to justify an internal

audit function. Wilson Sons Limited operates an internal audit function and

the Wilson Sons Limited Board monitors their internal financial control

systems through reports received from the internal audit function.



24

In reviewing Wilson Sons Limited, the Board receives reports from the Wilson

Sons Limited internal audit department, legal department and Wilson Sons

Limited external auditors.

The Parent Group (including Ocean Wilsons Investments Limited) has an

ongoing process for identifying, evaluating and managing key risks including

financial, operational and compliance controls. A risk register is maintained

detailing business risks, together with controls and responsibilities. The risk

register is regularly reviewed by the finance committee.

The systems operated both by the Parent Group and principal operating

subsidiary are reviewed annually. The Board is satisfied that these systems are

operating effectively.

The Combined Code states that the finance committee should review

arrangements by which staff can raise concerns about possible improprieties

in matters of financial reporting. Ocean Wilsons Holdings Limited does not

have a whistleblowing policy as there is only one employee. The Wilson Sons

Limited Group whistleblowing policy and procedures enable employees who

have concerns about the application of the Group’s Code of Ethics to raise

them with the Ethics Committee. The Ethics Committee will maintain their

anonymity and report back to the employee on actions taken.

Relations with Shareholders

Communications with shareholders are important to the Board. Ocean Wilsons

Holdings Limited sends both its annual report and accounts and half year

accounts to all shareholders. To ensure Board members develop an

understanding of the views of major shareholders there is regular dialogue

with major institutional shareholders. The Chairman and Executive Director

usually attend a number of these meetings. A report of meetings with

shareholders is distributed to all directors. All Broker reports are distributed to

all Board members. The Annual General Meeting of the Company provides a

forum both formal and informal, for shareholders to meet and discuss

issues with the Board. Despite being a Bermudian Company the Annual

General Meeting is currently held in the UK to enable the maximum

number of shareholders to attend. The Company Website

www.oceanwilsons.bm contains copies of the annual and interim report and

stock exchange announcements.

Going Concern

The Group closely monitors and manages its liquidity risk. The Group has

considerable financial resources including US$130.1 million in cash and cash

equivalents and the Group’s borrowings have a long maturity profile. The

Group’s business activities together with the factors likely to affect its future

development and performance are set out in the Chairman’s statement,

operating review and investment managers report on pages 1 to 20. The

financial position, cash flows and borrowings of the Group are set out in the

Financial review in pages 4 to 5. In addition note 38 to the financial

statements includes details of its financial instruments and hedging activities

and its exposure to credit risk and liquidity risk. Details of the Group’s

borrowings are set out in note 22. Based on the Group’s forecasts and

sensitivities run, the Directors have a reasonable expectation that the

Company and the Group have adequate resources to continue in operational

existence for the foreseeable future. For this reason, they continue to adopt

the going concern basis in preparing the accounts.

Directors’ responsibilities

The Directors are required by Bermuda company law to lay financial

statements before the Company in a general meeting. In doing this the

Directors prepare accounts on a going concern basis for each financial year

which give a true and fair view of the state of affairs of the Company and the

Group and of the profit or loss of the Group for that period. In preparing those

accounts, the Directors have considered whether:

• suitable accounting policies have been adopted and applied

consistently;

• judgements and estimates are reasonable and prudent; and

• applicable accounting standards have been followed, subject to any

material departures disclosed and explained in the accounts.

By Order of the Board

Malcolm Mitchell

Secretary

25 March 2011


25


26

We have audited the group financial statements of Ocean Wilsons Holdings

Limited for the year ended 31 December 2010 which comprise the

consolidated statement of comprehensive income, the consolidated balance

sheet, the consolidated statement of changes in equity, the consolidated cash

flow statement and the related notes 1 to 39. The financial reporting

framework that has been applied in their preparation is applicable Bermudian

law and International Financial Reporting Standards (IFRSs) as issued by the

International Accounting Standards Board.

This report is made solely to the company’s members, as a body, in

accordance with section 90 of the Bermuda Companies Act 1981. Our audit

work has been undertaken so that we might state to the company’s members

those matters we are required to state to them in an auditor’s report and for

no other purpose. To the fullest extent permitted by law, we do not accept or

assume responsibility to anyone other than the company and the company’s

members as a body, for our audit work, for this report, or for the opinions we

have formed.

Respective responsibilities of directors and auditor

As explained more fully in the Directors’ Responsibilities Statement, the

directors are responsible for the preparation of the group financial statements

that give a true and fair view. Our responsibility is to audit and express an

opinion on the group financial statements in accordance with applicable

Bermudian law and International Standards on Auditing (UK and Ireland).

Those standards require us to comply with the Auditing Practices Board’s

Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in

the financial statements sufficient to give reasonable assurance that the

financial statements are free from material misstatement, whether caused by

fraud or error. This includes an assessment of: whether the accounting policies

are appropriate to the group’s circumstances and have been consistently

applied and adequately disclosed; the reasonableness of significant

accounting estimates made by the directors; and the overall presentation of

the financial statements. In addition, we read all the financial and

non-financial information in the annual report to identify material

inconsistencies with the audited financial statements. If we become aware of

any apparent material misstatements or inconsistencies we consider the

implications for our report.

Opinion on financial statements

In our opinion the group financial statements:

• give a true and fair view of the state of the group’s affairs as at

31 December 2010 and of its profit for the year then ended;

• have been properly prepared in accordance with IFRSs as issued by the

International Accounting Standards Board; and

• have been prepared in accordance with the Bermudian Companies Act

1981.

Matters on which we are required to report by exception

We have nothing to report in respect of the following:

Under the Listing Rules we are required to review:

• the part of the Corporate Governance Statement relating to the

company’s compliance with the nine provisions of the June 2008

Combined Code specified for our review.

Other matter

In addition to our legal duties set out above, the Company has asked us to

report on the following area as if they were a UK incorporated company.

We have nothing to report in respect of the review of the directors’ statement,

contained within the Report of the Directors, in relation to going concern.

Deloitte LLP

Chartered Accountants and Statutory Auditor

London

25 March 2011

Independent Auditor’s Reportto the Members of Ocean Wilsons Holdings Limited

Year to Year to

31 December 31 December

2010 2009

Notes US$’000 US$’000

Revenue 3 575,551 477,888

Raw materials and consumables used (67,222) (49,570)

Employee benefits expense 6 (205,486) (162,367)

Depreciation & amortisation expense 5 (42,923) (32,066)

Other operating expenses (192,090) (155,042)

Profit on disposal of property, plant and equipment 90 470

Operating profit 67,920 79,313

Profit realised on formation of joint venture 29 20,407 –

Investment revenue 7 17,982 35,613

Other gains and losses 8 22,460 34,305

Finance costs 9 (11,611) (9,411)

Profit before tax 117,158 139,820

Income tax expense 10 (30,564) (31,228)

Profit for the year 86,594 108,592

Other comprehensive income

Exchange differences arising on translation of foreign operations 4,644 16,072

Other comprehensive income for the year 4,644 16,072

Total comprehensive income for the year 91,238 124,664

Profit for the year attributable to:

Equity holders of parent 56,879 70,200

Non-controlling interests 29,715 38,392

86,594 108,592

Total comprehensive income for the year attributable to:

Equity holders of parent 59,749 79,059


91,238 124,664

Earnings per share

Basic and diluted 12 160.8c 198.5c

Consolidated Statement of Comprehensive Incomefor the year ended 31 December 2010

27


As at As at


2010 2009


Non-current assets

Goodwill 13 15,612 15,612

Other intangible assets 14 16,841 2,239

Property, plant and equipment 15 560,846 438,892

Deferred tax assets 24 28,923 25,499

Trade and other receivables 21 6,400 –

Other non-current assets 27 6,550 10,521

635,172 492,763

Current assets

Inventories 19 20,147 20,687

Trading investments 18 297,273 249,778

Trade and other receivables 21 129,242 107,075

Cash and cash equivalents 130,071 196,428

576,733 573,968

Total assets 1,211,905 1,066,731

Current liabilities

Trade and other payables 26 (126,656) (98,690)

Current tax liabilities (3,354) (853)

Obligations under finance leases 25 (4,847) (3,902)

Bank overdrafts and loans 22 (25,565) (18,146)

(160,422) (121,591)

Net current assets 416,311 452,377

Non-current liabilities

Bank loans 22 (288,596) (237,271)

Deferred tax liabilities 24 (15,073) (16,140)

Provisions 27 (12,289) (9,831)

Obligations under finance leases 25 (6,305) (8,653)

(322,263) (271,895)

Total liabilities (482,685) (393,486)

Net assets 729,220 673,245

Capital and reserves

Share capital 28 11,390 11,390

Retained earnings 475,042 435,844

Capital reserves 31,760 31,760

Translation reserve 16,900 14,030

Equity attributable to equity holders of the parent 535,092 493,024


Total equity 729,220 673,245

The accounts on pages 27 to 65 were approved by the Board on 25 March 2011. The accompanying notes are part of this Consolidated Balance Sheet.

J. F. Gouvêa Vieira K. W. Middleton

Chairman Director

Consolidated Balance Sheetas at 31 December 2010

28


Attributable

to equity Non

Share Retained Capital Translation holders of controlling Total

capital earnings reserves reserve the parent interests equity

For the year ended 31 December 2009 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000

Balance at 1 January 2009 11,390 376,253 31,760 5,171 424,574 139,517 564,091

Currency translation adjustment – – – 8,859 8,859 7,213 16,072

Profit for the period – 70,200 – – 70,200 38,392 108,592

Total income and expense for the period – 70,200 – 8,859 79,059 45,605 124,664

Dividends – (10,609) – – (10,609) (6,682) (17,291)

Increase in capital – – – – – 1,781 1,781

Balance at 31 December 2009 11,390 435,844 31,760 14,030 493,024 180,221 673,245

For the year ended 31 December 2010

Balance at 1 January 2010 11,390 435,844 31,760 14,030 493,024 180,221 673,245

Currency translation adjustment – – – 2,870 2,870 1,774 4,644

Profit for the period – 56,879 – – 56,879 29,715 86,594

Total income and expense for the period – 56,879 – 2,870 59,749 31,489 91,238

Dividends – (14,853) – – (14,853) (11,405) (26,258)

Acquisition of non-controlling interest – (2,828) – – (2,828) (6,177) (9,005)

Balance at 31 December 2010 11,390 475,042 31,760 16,900 535,092 194,128 729,220

Share capital

The Group has one class of ordinary share which carries no right to fixed income.

Capital reserves

The capital reserves arise principally from transfers from revenue to capital reserves made in the Brazilian subsidiaries arising in the following circumstances:

(a) profits of the Brazilian subsidiaries and Brazilian holding company which in prior periods were required by law to be transferred to capital reserves and

other profits not available for distribution; and

(b) Wilson Sons Limited bye-laws require the company to credit an amount equal to 5% of the company’s net profit to a retained earnings account to be

called legal reserve until such amount equals 20% of the Wilson Sons Limited share capital.

Translation reserve

The translation reserve arises from exchange differences on the translation of operations with a functional currency other than US Dollars.

Amounts in the statement of changes of equity are stated net of tax where applicable.

Consolidated Statement of Changes in Equityas at 31 December 2010

29


30

Consolidated Cash Flow Statementfor the year ended 31 December 2010


Year to Year to


2010 2009


Net cash inflow from operating activities 31 85,538 52,238

Investing activities

Interest received 10,159 10,379

Dividends received from trading investments 3,795 1,487

Proceeds on disposal of trading investments 120,849 104,941

Income from underwriting activities – 2

Proceeds on disposal of property, plant and equipment 959 751

Purchases of property, plant and equipment (161,971) (139,742)

Purchases of trading investments (145,884) (110,420)

Net cash outflow arising from creation of joint venture 5,040 –

Net cash outflow arising on purchase of intangible asset (14,546) –

Net cash inflow arising on increase in capital in non-controlling interest – 1,781

Net cash used in investing activities (181,599) (130,821)

Financing activities

Dividends paid 11 (14,853) (10,609)

Dividends paid to non-controlling interests in subsidiary (11,405) (6,682)

Repayments of borrowings (18,953) (16,848)

Repayments of obligations under finance leases (3,969) (3,844)

New bank loans raised 77,650 83,894

Increase in bank overdrafts 6,252 114

Net cash outflow arising on purchase of non-controlling interest (9,005) –

Net cash from financing activities 25,717 46,025

Net decrease in cash and cash equivalents (70,344) (32,558)

Cash and cash equivalents at beginning of year 196,428 205,315

Effect of foreign exchange rate changes 3,987 23,671

Cash and cash equivalents at end of year 130,071 196,428

31

Notes to the Accountsfor the year ended 31 December 2010


1 General Information

Ocean Wilsons Holdings Limited is a company incorporated in Bermuda under the Companies Act 1981 and the Ocean Wilsons Holdings Limited Act, 1991.

The address of the registered office is given on page 20. The nature of the Group´s operations and its principal activities are set out in the operating review on

pages 1 to 20.

These financial statements are presented in US Dollars because that is the currency of the primary economic environment in which the Group operates. Entities

with a functional currency other than US Dollars are included in accordance with the policies set out in note 2.

In the current year the following new and revised standards and interpretations have been adopted and have affected the amounts reported in these financial

statements.

The Group has adopted with effect from 1 January 2010, IFRS 3 (2008) Business Combinations and IAS 27 (2008) Consolidated and Separate Financial

Statements. The revisions to IAS 27 consequent upon the issuance of IFRS 3 (Revised) result in transactions with non-controlling interests now being accounted

for as transactions with equity owners of the Group. For purchases of non-controlling interests where there is no change in control, the difference between any

consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity (previously goodwill). Gains or losses

on disposals to non-controlling interests are now also recorded in equity (previously recorded through the statement of comprehensive income). The adoption of

the revised standards has resulted in references to minority interests being amended to non-controlling interests.

At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied in these financial statements

were in issue but not yet effective:

IAS 12 (Amended) Income Taxes

IAS 24 (Amended) Related party disclosures

IAS 32 (Amended) Financial Instruments: Presentation – Classification of Rights issues

IFRS 7 (Amended) Financial Instruments: Disclosures

IFRS 9 Financial Instruments

IFRIC 14 (Amended) Prepayments of a Minimum Funding Requirements

IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments

The directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the financial statements of the

Group except for Financial instruments IFRS 9 when this standard comes into effect for periods commencing on or after 1 January 2013.

2 Significant accounting policies and critical accounting judgements

Basis of accounting

The financial statements have been prepared in accordance with IFRSs adopted for use by the International Accounting Standards Board (“IASB”).

The financial statements have been prepared on the historical cost basis, except for the revaluation of financial instruments and share-based payments liability

that are measured at fair value. The principal accounting policies adopted are set out below.

The directors have, at the time of approving the financial statements, a reasonable expectation that the Group has adequate resources to continue in operational

existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the financial statements. The directors’

assessment of going concern is included in the Report of the Directors.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to

31 December each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to

obtain benefits from its activities.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the effective date of

acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their

accounting policies into line with those used by other members of the Group. All intra-group transactions, balances, income and expenses are eliminated on

consolidation.

Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group’s equity therein. Non-controlling interests consist of

the amount of those interests at the date of the original business combination and the non-controlling interest’s share of changes in equity since the date of the

combination.

32

Notes to the Accounts


2 Significant accounting policies and critical accounting judgements (continued)

Where a change in the percentage of interests in a controlled entity do not result in a change of control, the difference between the consideration paid for the

additional interest and the book value of the net assets in the subsidiary at the time of the transactions is taken directly to equity.

Foreign currency

The functional currency for each Group entity is determined as the currency of the primary economic environment in which it operates (its functional currency).

Transactions other than those in the functional currency of the entity are translated at the exchange rate prevailing at the date of the transaction. Monetary assets

and liabilities denominated in foreign currencies are retranslated at year end exchange rates.

Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in the consolidated statement of

comprehensive income for the period. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

On consolidation, the consolidated statement of comprehensive income, items of entities with a functional currency other than US Dollars are translated into

US Dollars, the Group’s presentational currency, at average rates of exchange. Balance sheet items are translated into US Dollars at year end exchange rates.

Exchange differences arising on consolidation of entities with functional currencies other than US Dollars are classified as equity and are recognised in the

Group’s translation reserve.

Investments in associates

An associate is an entity over which the Group is in a position to exert significant influence and that is neither a subsidiary nor an interest in a joint venture.

Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those

policies.

The results, assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting. Under this method,

investments in associates are carried in the consolidated balance sheet at cost as adjusted for post-acquisition changes in the Group’s share of the net assets of

the associate, less any impairment in the value of individual investments. Losses of an associate in excess of the Group’s interest in that associate are not

recognised.

Where a Group entity transacts with an associate of the Group, profits and losses are eliminated to the extent of the Group’s interest in the relevant associate.

Interests in joint ventures

A joint venture is a contractual arrangement whereby the Group and other parties undertake an economic activity that is subject to joint control, that is when the

strategic financial and operating policy decisions relating to the activities require the unanimous consent of the parties sharing control.

Where a Group entity undertakes its activities under joint venture arrangements directly, the Group’s share of jointly controlled assets and any liabilities incurred

jointly with other ventures are recognised in the financial statements of the relevant entity and classified according to their nature.

Joint venture arrangements that involve the establishment of a separate entity in which each venturer has an interest are referred to as jointly controlled entities.

The Group reports its interests in jointly controlled entities using proportionate consolidation. The Group’s share of the assets, liabilities, income and expenses of

jointly controlled entities are combined with the equivalent items in the consolidated financial statements on a line-by-line basis.

Where the Group transacts with its jointly controlled entities, unrealised profits and losses are eliminated to the extent of the Group’s interests in the joint venture.

When a joint venture is established the assets acquired from the joint venture partner are fair valued at the date of acquisition. In accordance with SIC 13 Jointly

Controlled Entities non-monetary contributions to the joint venture from the Group are recognised at book value. The portion of gains or losses resulting from any

difference between the net assets acquired and the net assets contributed to the joint venture are recognised in the statement of comprehensive income.

Retirement benefit costs

Payments to defined contribution retirement benefit plans are charged as an expense as they fall due. Payments made to state-managed retirement benefit

schemes are dealt with as payments to defined contribution plans where the Group’s obligations under the plans are equivalent to those arising in a defined

contribution retirement benefit plan.

33



Taxation

Tax expense for the period comprises current tax and deferred tax.

Current tax is based on assessable profit for the year. Taxable profit differs from profit as reported in the statement of comprehensive income because it excludes

items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability

for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is the tax expected to be payable or recoverable on temporary differences (i.e. differences between the carrying amount of assets and liabilities in

the financial statements and the corresponding tax basis used in the computation of taxable profit). Deferred tax is accounted for using the balance sheet liability

method and is provided on all temporary differences with certain limited exceptions as follows. Deferred tax is not provided:

• in respect of tax payable on undistributed earnings of subsidiaries and joint ventures where the Group is able to control the remittance of profits and it is

probable that there will be no remittance of past profits earned in the foreseeable future;

• on the initial recognition of an asset or liability in a transaction that does not affect accounting profit or taxable profit and is not a business combination;

nor is deferred tax provided on subsequent changes in the carrying value of such assets and liabilities, for example where they are depreciated; and

• on the initial recognition of any non-tax deductible goodwill.

Deferred tax assets are recognised only to the extent that it is probable that they will be recovered through sufficient future taxable profit. The carrying amount of

deferred tax assets is reviewed at each balance sheet date.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised, based on tax rates and laws

that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or credited in the statement of comprehensive income,

except when it relates to items charged or credited directly to equity, in which case the deferred tax is also taken directly to equity.

A company will normally have a legally enforceable right to set off a deferred tax asset against a deferred tax liability when they relate to income taxes levied by

the same taxation authority and the taxation authority permits the company to make or receive a single net payment. In the consolidated financial statements, a

deferred tax asset of one entity in the Group cannot be offset against a deferred tax liability of another entity in the Group as there is no legally enforceable right

to offset tax assets and liabilities between Group companies.

Property, plant and equipment

Property, plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses.

Depreciation is charged so as to write off the cost or valuation of assets, other than land and assets under construction, over their estimated useful lives, using

the straight-line method as follows.

Freehold Buildings: 25 years

Leasehold Buildings: Period of the lease

Floating Craft: 20 years

Vehicles: 5 years

Plant and Equipment: 5 to 20 years

Assets in the course of construction are carried at cost, less any recognised impairment loss. Costs include professional fees for qualifying assets. Depreciation of

these assets, on the same basis as other property assets, commences when the assets are ready for intended use.

Borrowing costs incurred on qualifying fixed assets are capitalised in the period in which they are incurred.

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets.

Overhaul costs are capitalised and depreciated over the period in which the economic benefits are received.

The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds

and the carrying amount of the asset and is recognised in the statement of comprehensive income.

34




Goodwill

The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired. The recoverable amounts are

determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the discount rate, growth rates and

expected changes to selling prices and costs during the period. Management estimates discount rates using pre-tax rates that reflect current market assessments

of the time value money and the risks specific to the cash generating unit. Growth rates are based on management’s forecasts and historical trends. Changes in

selling prices and direct costs are based on past practices and expectations of future changes in the market.

Non-controlling interests

Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group’s equity therein. Non-controlling interests consist of

the amount of those interests at the date of the original business combination and the non-controlling share of changes in equity since the date of the combination.

Impairment of tangible and other intangible assets

Assets that are subject to amortisation or depreciation are reviewed for impairment whenever events or changes in circumstances indicate that their carrying

amounts may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The

recoverable amount is the higher of fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest

levels for which there are separately identifiable cash inflows.

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials, spare parts and, where applicable, direct labour costs and

those overheads that have been incurred in bringing the inventories to their present location and condition. Net realisable value represents the estimated selling

price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

Financial instruments

Financial assets and financial liabilities are recognised on the Group’s balance sheet when the Group becomes a party to the contractual provisions of the

instrument.

• Trade Receivables: Trade receivables, loans and other amounts receivable are intially stated at the fair value of the amounts due, less provision for

impairment. A provision for impairment is established when there is objective evidence that the Group will not be able to collect all amounts due according

to the original terms of receivables. The amount of the provision is recognised in the consolidated statement of comprehensive income.

• Investments: Investments are recognised and derecognised on a trade date basis where the purchase or sale of an investment is under a contract whose

terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at the fair value, plus

directly attributable transaction costs. Where securities are held for trading purposes, gains and losses arising from changes in fair value are included in the

statement of comprehensive income for the period. Unquoted investments held for trading purposes are stated at fair value through profit and loss as

determined by using various valuation techniques. Fair valuations include using recent arms length transactions between knowledgeable and willing

parties where available. For available-for-sale investments, gains and losses arising from changes in fair value are recognised directly in equity, until the

security is disposed of or is determined to be impaired, at which time the cumulative gain or loss previously recognised in equity is included in the profit

or loss for the period.

• Cash and Cash Equivalents: Cash and cash equivalents comprise cash on hand and other short-term highly liquid investments that are convertible to a

known amount of cash and are subject to an insignificant risk of changes in value.

• Bank Borrowings: Interest-bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Finance charges, including

premiums payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis to the statement of comprehensive income

using the effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which

they arise.

Derivatives

The Group periodically uses derivative financial instruments to reduce exposure to foreign exchange and interest rate movements. The Group has not adopted

the hedge accounting provisions of IAS 39 “Financial Instruments: Recognition and Measurement”. Derivatives are measured at each balance sheet date at fair

value. Gains and losses arising from changes in fair value are included in the statement of comprehensive income for the period within investment revenue or

finance costs for exchange and interest derivatives.

35



Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and characteristics are not closely

related to those of host contracts and the host contracts are not carried at fair value, with gains or losses reported in the statement of comprehensive income.

Provisions

Provisions are recognised when the Group has a present obligation as a result of a past event, and it is probable that the Group will be required to settle that

obligation. Provisions are measured at the directors’ best estimate of the expenditure required to settle the obligation at the balance sheet date.

Construction contracts

Where the outcome of a construction contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract

activity at the balance sheet date. This is normally measured by the proportion that contract costs incurred for work performed to date bear to the estimated total

contract costs, except where this would not be representative of the stage of completion. Variations in contract work, claims and incentive payments are included

to the extent that they have been agreed with the customer.

Where the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that it is

probable will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred.

When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

Share-based payments

The Group has applied the requirements of IFRS 2 Share-Based Payment. Cash settled long-term incentive plans are measured at fair value at the balance sheet

date. A liability equal to the portion of the services received is recognised at the current fair value determined at each balance sheet date. Any increase or

decrease in the liability is recognised in the statement of comprehensive income.

Fair value is measured by use of a binomial model. The fair value calculated by the model has been adjusted, based on mangements best estimate, for the

effects of behavioural considerations.

Revenue

Revenue is measured at fair value and represents amounts receivable for goods and services provided in the normal course of business net of trade discounts,

VAT and other sales related taxes. If the Group is acting solely as an agent, amounts billed to customers are offset against relevant costs.

Revenue from construction contracts is recognised in accordance with the Group´s accounting policy on construction contracts (see above).

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly

discounts estimated future cash receipts through the expected life of the financial asset to that asset´s net carrying amount.

Dividend income from investments is recognised when the shareholders´ rights to receive payment have been established.

Operating profit

Operating profit is stated after the Group’s share of results of associates but before investment revenue and finance costs and other gains and losses.

Leasing

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases

are classified as operating leases.

Assets held under finance leases are recognised as assets of the Group at their fair value at the inception of the lease, or if lower the present value of the

minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned

between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance

charges are charged to the statement of comprehensive income.

Rentals payable under finance leases are charged to income on a straight-line basis over the term of the relevant lease.

36




Critical accounting judgements and key sources of estimation uncertainty

In the process of applying the Group’s accounting policies, which are described above, management has made the following judgements that have the most

significant effect on the amounts recognised in the financial statements.

Legal cases

In the normal course of business in Brazil, the Group is exposed to local legal cases. Provisions for legal cases are made when the Group’s management, together

with their legal advisors, consider the probable outcome is a financial settlement against the Group. Provisions are measured at the Directors’ best estimate of the

expenditure required to settle the obligation based upon legal advice received. For labour claims the provision is based on prior experience and management’s

best knowledge of the relevant facts and circumstances. For tax cases the provision is based on managements’ best knowledge of the relevant facts and

circumstances and legal advice received.

Impairment of goodwill

Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been allocated. The value

in use calculation requires the entity to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to

calculate present value. The carrying amount of goodwill at the balance sheet date was US$ 15.6 million. Details of the impairment loss calculation are provided

in note 13.

Cash settled share based payment schemes

The fair value of cash settled share based payments is determined using a binomial model. The assumptions used in determining this fair value include the life of

the options, share price volatility, dividend yield and risk free rate. Expected volatility is determined by calculating the volatility of the Group’s share price over a

historical period. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of behavioural considerations.

Expected dividend yield are based on the Groups dividend policy. In determining the risk free rate the Group utilises the yield on a zero coupon government

bond in the currency in which the excercise price is expressed. Forfeiture rates are applied and historical distributions to fair valuations in computing the share

based payment charge. The Group uses forfeiture rates in line with management’s best estimate of the percentage of awards which will be forfeited, based on the

proportion of award holders expected to leave the Group.

Any changes in these assumptions will impact the carrying amount of cash settled share based payments liabilities.

Depreciation

Depreciation is charged so as to write off the cost or valuation of assets, other than land and assets under construction, over their estimated useful lives, using

the straight-line method. Estimated useful lives are determined based on prior experience and management’s best knowledge.

3 Revenue

An analysis of the Group’s revenue is as follows:Year ended Year ended


2010 2009

US$’000 US$’000

Sales of services 536,258 455,801

Revenue from construction contracts 39,293 22,087

575,551 477,888

Investment income (note 7) 17,982 35,613

593,533 513,501

All revenue is derived from continuing operations.

37


4 Business and geographical segments

Business segments

Ocean Wilsons Holdings has two reportable segments: Maritime services and investments.

The maritime services segment provides towage, port terminals, ship agency, offshore, logistics and vessel construction services in Brazil. The investment segment

holds a portfolio of international investments.

Segment information relating to these businesses is presented below.

For the year ended 31 December 2010Maritime

Services Investment Unallocated Consolidated

Year ended Year ended Year ended Year ended

31 December 31 December 31 December 31 December

2010 2010 2010 2010

US$’000 US$’000 US$’000 US$’000

Revenue 575,551 – – 575,551

Result

Segment result 78,456 (2,930) (7,606) 67,920

Profit realised on formation of joint venture 20,407 – – 20,407

Investment revenue 13,940 3,953 89 17,982

Other gains and losses – 22,460 – 22,460

Finance costs (11,611) – – (11,611)

Profit before tax 101,192 23,483 (7,517) 117,158

Tax (30,564) – – (30,564)

Profit after tax 70,628 23,483 (7,517) 86,594

Other information

Capital additions (166,739) – – (166,739)

Depreciation and amortisation (42,922) – (1) (42,923)

Balance Sheet

Assets

Segment assets 939,521 265,023 7,361 1,211,905

Liabilities

Segment liabilities (472,309) (505) (9,871) (482,685)

38



4 Business and geographical segments (continued)

For the year ended 31 December 2009Maritime

Services Investment Unallocated Consolidated

Year ended Year ended Year ended Year ended


2009 2009 2009 2009

US$’000 US$’000 US$’000 US$’000

Revenue 477,888 – – 477,888

Result

Segment result 96,303 (2,605) (14,385) 79,313

Investment revenue 34,343 1,208 62 35,613

Other gains and losses – 34,305 – 34,305

Finance costs (9,411) – – (9,411)

Profit before tax 121,235 32,908 (14,323) 139,820

Tax (31,140) (88) – (31,228)

Profit after tax 90,095 32,820 (14,323) 108,592

Other information

Capital additions (149,553) – – (149,553)

Depreciation and amortisation (32,065) – (1) (32,066)

Balance Sheet

Assets

Segment assets 808,665 247,180 10,886 1,066,731

Liabilities

Segment liabilities (383,247) (409) (9,830) (393,486)

Finance costs and associated liabilities have been allocated to reporting segments where interest costs arise from loans used to finance the construction of fixed

assets in that segment.

Unallocated corporate costs, assets and liabilities include the Ocean Wilsons Holdings Limited long-term incentive plan. The long-term incentive plan is a cash

settled phantom option scheme linked to the Wilson Sons Limited share price. The scheme is fair valued using a Binomial model at each reporting date.

Geographical Segments

The Group’s operations are located in Bermuda, Brazil, United Kingdom and Guernsey.

All the Group’s sales are derived in Brazil.

The following is an analysis of the carrying amount of segment assets, and additions to property, plant and equipment, analysed by the geographical area in

which the assets are located.Additions to

Carrying amount of property, plant and equipment

segment assets and intangible assets

Year ended Year ended


2010 2009 2010 2009

US$’000 US$’000 US$’000 US$’000

Brazil 869,766 713,816 166,739 149,553

Bermuda 340,527 350,736 – –

Other 1,612 2,179 – –

1,211,905 1,066,731 166,739 149,553

39


5 Profit for the year

Profit for the year has been arrived at after charging:Year ended Year ended


2010 2009

US$’000 US$’000

Net foreign exchange losses 4,214 25,769

Depreciation of property, plant and equipment 42,435 31,917

Amortisation of intangible assets 488 149

Operating lease rentals 14,528 12,440

Auditor’s remuneration for audit services (see below) 894 837

Non-executive directors emoluments 259 230

A more detailed analysis of auditor’s remuneration is provided below:

Statutory audit 806 752

Further assurance services 75 72

Other services 13 13

894 837

As a matter of routine, the Group reviews taxes and levies impacting its businesses with a view to ensuring that payments of such amounts are correctly made

and that no amounts are paid unnecessarily. In this process, where it is confirmed that taxes and/or levies have been overpaid, the Group takes appropriate

measures to recover such amounts. During the year ended 31 December 2007, the Group received a response to a consultation to tax officials confirming the

exemption of certain transactions to taxes which the Group had been paying through that date. This response permits the Group to recoup such amounts paid in

the past provided the Group takes certain measures to demonstrate that it has met the requirements of tax regulations for such recovery. During 2009, the Group

was able to meet such requirements and recognised US$6.5 million as a credit in the Consolidated Statement of Comprehensive Income for that year. The Group

concluded the process in 2009 and no amounts were recognised in 2010.

6 Employee benefits expenseYear ended Year ended


2010 2009

US$’000 US$’000

Aggregate remuneration comprised:

Wages and salaries 149,582 117,095

Share based payment expense 16,545 17,174

Social security costs 38,474 27,370

Other pension costs 885 728

205,486 162,367

7 Investment revenueYear ended Year ended


2010 2009

US$’000 US$’000

Interest on bank deposits 10,159 10,379

Exchange gains on cash 3,987 23,671

Dividends from equity investments 3,795 1,487

Investment revenues from underwriting activities 41 76

17,982 35,613

40



8 Other gains and lossesYear ended Year ended


2010 2009

US$’000 US$’000

Increase in fair value of trading investments held at year end 21,332 36,337

Profit/(loss) on disposal of trading investments 1,128 (2,032)

22,460 34,305

Other gains and losses form part of the movement in trading investments as outlined in note 18.

9 Finance costsYear ended Year ended


2010 2009

US$’000 US$’000

Interest on bank overdrafts and loans 9,354 7,580

Exchange gain on foreign currency borrowings (227) (2,098)

Interest on obligations under finance leases 1,848 1,254

Total borrowing costs 10,975 6,736

Other interest 636 2,675

11,611 9,411

Borrowing costs incurred on qualifying assets of US$1,889,000 (2009: US$728,000) were capitalised in the year.

10 TaxationYear ended Year ended


2010 2009

US$’000 US$’000

Current

Brazilian taxation

Corporation tax 22,747 31,429

Social contribution 8,492 12,031

Total Brazilian current tax 31,239 43,460

UK corporation tax – 187

Total current tax 31,239 43,647

Deferred tax

Charge for the year in respect of deferred tax liabilities 7,353 23,507

Credit for the year in respect of deferred tax assets (8,028) (35,926)

Total deferred tax (675) (12,419)

Total taxation 30,564 31,228

Brazilian corporation tax is calculated at 25% (2009: 25%) of the assessable profit for the year.

Brazilian social contribution tax is calculated at 9% (2009: 9%) of the assessable profit for the year.

At the present time, no income, profit, capital or capital gains taxes are levied in Bermuda and accordingly, no provision for such taxes has been recorded by the

Company. In the event that such taxes are levied, the Company has received an undertaking from the Bermuda Government exempting it from all such taxes

until 28 March 2016.

41


10 Taxation (continued)

The charge for the year can be reconciled to the profit per the statement of comprehensive income as follows:Year ended Year ended


2010 2009

US$’000 US$’000


Tax at the standard Brazilian tax rate of 34% (2009: 34%) 39,834 47,539

Tax effect of expenses/income that are not included in determining taxable profit (9,292) (12,910)

Effect of different tax rates of subsidiaries operating in other jurisdictions 22 (3,401)

Tax expense and effective rate for the year 30,564 31,228

Effective rate for the year 26% 22%

The Group earns its profits primarily in Brazil. Therefore the tax rate used for tax on profit on ordinary activities is the standard rate in Brazil of 34%, consisting of

corporation tax, 25% and social contribution 9%.

11 DividendsYear ended Year ended


2010 2009

US$’000 US$’000

Amounts recognised as distributions to equity holders in the year:

Final dividend paid for the year ended 31 December 2009 of zero (2008: 26.0c) per share – 9,194

Second interim dividend paid for the year ended 31 December 2009 of 38.0c (2008: zero) per share 13,438 –

First interim dividend paid for the year ended 31 December 2010 of 4.0c per share (2009: 4.0c) 1,415 1,415

14,853 10,609

Proposed final dividend for the year ended 31 December 2010 of 38.0c (2009: zero) per share 13,438 –

Second interim dividend for the year ended 31 December 2009 paid March 2010 of 38.0c per share – 13,438

The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial

statements.

12 Earnings per share

The calculation of the basic and diluted earnings per share is based on the following data:Year ended Year ended


2010 2009

US$’000 US$’000

Earnings:

Earnings for the purposes of basic earnings per share being net profit attributable to equity holders of the parent 56,879 70,200

Number of shares:

Weighted average number of ordinary shares for the purposes of basic and diluted earnings per share 35,363,040 35,363,040

42



13 Goodwill2010 2009

US$’000 US$’000

Cost and carrying amount

At 1 January and 31 December 15,612 15,612

Goodwill attributed to Tecon Rio Grande 13,132 13,132

Goodwill attributed to Tecon Salvador 2,480 2,480

The Group tests annually for impairment, or more frequently if there are indications that goodwill might be impaired.

For the purposes of testing goodwill for impairment the Group prepares cash flow forecasts for the relevant cash generating unit (Tecon Rio Grande and Tecon

Salvador) derived from the most recent financial budget for the next year and extrapolates cash flows for the remaining life of the concession based on an

estimated annual growth of between 8% and 10% for Tecon Rio Grande (2009: 6% to 8%) and 7% to 10% for Tecon Salvador (2009: 5.5% to 7%). This rate

does not exceed the average long-term historical growth rate for the relevant market. Management estimates growth rates based on past performance, current

market conditions and expectations of future market changes. The rate used pre-tax to discount forecast cash flows is 13% (2009: 15%).

14 Other intangible fixed assetsUS$’000

Cost

At 1 January 2009 3,238

Exchange differences 824

At 1 January 2010 4,062


Additions 14,546

At 31 December 2010 19,214

Amortisation

At 1 January 2009 1,439

Charge for the year 149


At 1 January 2010 1,823

Charge for the year 488


At 31 December 2010 2,373

Carrying amount

31 December 2010 16,841

31 December 2009 2,239

Intangible fixed assets arose from the acquisition of concession rights for the container and heavy cargo terminal in Salvador and the purchase of the Eadi Santo

Andre concession. The addition in 2010 relates to an amendment to the lease agreement with Companhia das Docas do Estado da Bahia (CODEBA).

This amendment is for the expansion of the area known as Ponta Norte adjacent to Tecon Salvador. As part of the agreement an intial payment of

US$14.5 million was made to CODEBA to acquire the rights to the area. In addition to the downpayment Tecon Salvador will pay a monthly rental fee,

container handling and general cargo fees.

Intangible fixed assets are amortised over the remaining terms of the concessions at the time of acquisition which for Tecon Salavdor, is 25 years, Eadi Santo

Andre is 10 years and Ponta Norte is 15 years.

43


15 Property, plant and equipmentLand and Vehicles, plant Assets under

buildings Floating Craft and equipment construction Total

US$’000 US$’000 US$’000 US$’000 US$’000

Cost or valuation

At 1 January 2009 86,710 228,200 101,677 19,651 436,238

Additions 23,265 3,737 27,172 95,379 149,553

Transfers – 52,653 – (52,653) –

Exchange differences 8,700 – 14,042 – 22,742

Disposals (6,230) (472) (584) – (7,286)

At 1 January 2010 112,445 284,118 142,307 62,377 601,247

Additions 30,959 6,908 64,175 64,697 166,739

Transfers – 98,429 – (98,429) –


Disposals (485) (574) (3,151) – (4,210)

Net effect of joint venture transaction (13) (8,606) (1,097) (4,586) (14,302)

At 31 December 2010 145,018 380,275 206,938 24,059 756,290

Accumulated depreciation and impairment

At 1 January 2009 21,655 73,770 35,778 – 131,203

Charge for the year 5,112 14,523 12,282 – 31,917


Disposals (6,157) (165) (584) – (6,906)

At 1 January 2010 22,182 88,128 52,045 – 162,355

Charge for the year 5,695 19,806 16,934 – 42,435

Exchange differences 432 – 1,782 – 2,214

Disposals (397) (122) (3,125) – (3,644)

Net effect of joint venture transaction (4) (7,639) (273) – (7,916)

At 31 December 2010 27,908 100,173 67,363 – 195,444

Carrying Amount

At 31 December 2010 117,110 280,102 139,575 24,059 560,846

At 31 December 2009 90,263 195,990 90,262 62,377 438,892

The carrying amount of the Group’s vehicles, plant and equipment includes an amount of US$24.9 million (2009: US$23.0 million) in respect of assets held

under finance leases.

Land and buildings with a net book value of US$370,000 (2009: US$385,000) and tugs with a value of US$2,587,000 (2009: US$2,794,000) have been given

in guarantee of various legal processes.

The Group has pledged assets having a carrying amount of approximately US$317.1million (2009: US$235.4 million) to secure loans granted to the Group.

At 31 December 2010, the Group had entered into contractual commitments for the acquisition of property, plant and equipment amounting to US$116.4 million

(2009: US$23.7 million).

44



16 SubsidiariesPlace of Method used

incorporation Effective to account

and operation interest* for investment

OCEAN WILSONS (INVESTMENTS) LIMITED Bermuda 100%** Consolidation

Investment holding and dealing company

ASCENSION UNDERWRITING LIMITED UK 100% Consolidation

Corporate underwriting member of Lloyds

WILSON SONS LIMITED Bermuda 58.25%** Consolidation

Holding company

WILSON SONS DE ADMINISTRAÇÃO E COMÉRCIO LTDA Brazil 58.25% Consolidation

Holding company

SAVEIROS CAMUYRANO SERVIÇOS MARÍTIMOS LTDA Brazil 58.25% Consolidation

Tug operators

WILSON, SONS S.A., COMÉRCIO, INDÚSTRIA, E AGÉNCIA DE NAVEGAÇÃO LTDA Brazil 58.25% Consolidation

Shipbuilders

WILSON, SONS ESTALEIRO LTDA Brazil 58.25% Consolidation

Shipbuilders

WILSON SONS AGÉNCIA MARÍTIMA LTDA Brazil 58.25% Consolidation

Ship Agents

WILSON, SONS NAVEGAÇÃO LTDA Brazil 58.25% Consolidation

Ship Agents

SOBRARE-SERVEMAR LTDA Brazil 58.25% Consolidation

Tug operator

WILPORT OPERADORES PORTUÁRIOS LTDA Brazil 58.25% Consolidation

Stevedoring

WILSON, SONS LOGÍSTICA LTDA Brazil 58.25% Consolidation

Logistics

WILSON, SONS TERMINAIS DE CARGAS LTDA Brazil 58.25% Consolidation

Transport services

EADI SANTO ANDRÉ TERMINAL DE CARGA LTDA Brazil 58.25% Consolidation

Bonded warehousing

VIS LIMITED Guernsey 58.25% Consolidation

Holding company

TECON RIO GRANDE S.A. Brazil 58.25% Consolidation

Port operator

TECON SALVADOR S.A. Brazil 58.25% Consolidation

Port operator

WILSON, SONS APOIO MARÍTIMO LTDA Brazil 58.25% Consolidation

Tug operator

WILSON SONS OPERACOES MARÍTIMAS ESPECIAS LTDA Brazil 58.25% Consolidation

Tug operator

BRASCO LOGÍSTICA OFFSHORE LTDA Brazil 58.25% Consolidation

Port operator

**Effective interest is the net interest of Ocean Wilsons Holdings Limited after non-controlling interests.

**Ocean Wilsons Holdings Limited holds direct interests in Ocean Wilsons Investments Limited and Wilsons Sons Limited.

The Group also has 58.25% effective interest in a private investment funds Hydrus Fundo de Investimento Multimercado in unit trusts.

This fund is administrated by Itau bank and the investment policy and objectives are determined by the Group’s treasury department in line with Group policy.

45


16 Subsidiaries (continued)

Ascension Underwriting Limited

Ascension Underwriting Limited is a wholly owned subsidiary which is a corporate underwriting member of the Lloyds insurance market in London. The results of

the company’s activities are included in the consolidated results of the Group. In addition, the company has assets and liabilities of US$0.3 million

(2009: US$0.3 million) and US$0.3 million (2009: US$0.3 million) respectively through its underwriting interests in a number of Lloyds syndicates. These assets

and liabilities are not controlled by the company and are not included in the consolidated results of the Group.

17 Joint ventures

The following amounts are included in the Group’s financial statements as a result of proportionate consolidation of joint ventures.2010 2009

US$’000 US$’000

Current assets 17,991 3,639

Non-current assets 127,213 2,297

Current liabilities (31,976) (4,744)

Non-current liabilities (109,242) (21)

2010 2009

US$’000 US$’000

Income 35,817 15,963

Expenses (30,860) (14,748)

The Group has the following significant interests in joint ventures.

Place of Proportion of Method used

incorporation effective to account

and operation interest for investment

Wilson Sons Ulratug Particapacoes S.A. Brazil 29.13% Proportional

Offshore consolidation

Consorcio de Rebocadores Baia de Sao Marcos Brazil 29.13% Proportional

Tug operator consolidation

Allink Transportes Internacionais Limitada Brazil 29.13% Proportional

Non-vessel operating common carrier consolidation

Consorcio de Rebocadores Barra de Coqueiros Brazil 29.13% Proportional

Tug operator consolidation

46



18 Investments2010 2009

US$’000 US$’000

Trading investments

At 1 January 249,778 209,994

Additions, at cost 145,884 110,420

Disposals, at market value (120,849) (104,941)

Increase in fair value of trading investments held at year end 21,332 36,337

Profit/(loss) on disposal of trading investments 1,128 (2,032)

At year end 297,273 249,778

Ocean Wilsons Investment Limited Portfolio 260,544 238,662

Wilson Sons Limited 36,729 11,116

Trading investments held at fair value at 31 December 297,273 249,778

Wilson Sons Limited

During 2010 Wilson Sons Limited invested in Real denominated and US Dollar denominated fixed rate certificates. The Wilson Sons Limited investments are held

and managed separately from the Ocean Wilsons Investment Portfolio.

Ocean Wilsons Investment Portfolio

The Group has not designated any financial assets that are not classified as trading investments as financial assets at fair value through profit or loss.

Trading investments above represent investments in listed equity securities, funds and unquoted equities and that present the Group with opportunity for return

through dividend income and capital appreciation.

Included in trading investments are open ended funds whose shares may not be listed on a recognised stock exchange but are redeemable for cash at the

current net asset value at the option of the company. They have no fixed maturity or coupon rate. The fair values of these securities are based on quoted market

prices where available. Where quoted market prices are not available fair values are determined using various valuation techniques.

A bank guarantee of £160,000 (US$250,000) in support of the Group’s insurance underwriting activities at Lloyds is secured against the trading investment

portfolio.

19 Inventories2010 2009

US$’000 US$’000

Raw materials and spare parts 20,147 20,687

20 Construction contracts2010 2009

US$’000 US$’000

Contracts in progress at the balance sheet date:

Amounts due from contract customers included in trade and other receivables – –

Amounts due to contract customers included in trade and other payables (17,073) (12,400)

(17,073) (12,400)

Contract costs incurred plus recognised profits less recognised losses to date 41,632 22,807

Less progress billings (58,705) (35,207)

(17,073) (12,400)

47


21 Trade and other receivablesYear ended Year ended


2010 2009

US$’000 US$’000

Trade and other receivables

Amount receivable for the sale of services 65,915 51,496

Allowance for doubtful debts (1,320) (1,637)

64,595 49,859

Income taxation recoverable 8,204 5,485

Prepayments and accrued income 62,843 51,731

135,642 107,075

Total current 129,242 107,075

Total non-current 6,400 –

135,642 107,075

Included in the Group’s trade receivable balances are debtors with a carrying amount of US$11.4 million (2009: US$6.9 million) which are past due but not

impaired at the reporting date for which the Group has not provided as there has not been a change in credit quality and the Group believes the amounts are still

considered recoverable. The Group does not hold any collateral over these balances.2010 2009

Ageing of past due but not impaired trade receivables US$’000 US$’000

From 0 – 30 days 7,351 5,051

From 31 – 90 days 3,442 1,440

From 91 – 180 days 609 443

more than 180 days – –

Total 11,402 6,934

The average credit period taken on services ranges from zero to 30 days. Interest is charged at up to 1% per month on the outstanding balances with an

additional fine of up to 2% per month. The Group has provided fully for all receivables over 180 days because historical experience is such that receivables that

are past due 180 days are generally not recoverable.

Included in the Group’s allowance for doubtful debts are individually impaired trade receivables with a balance of US$1.3 million which are aged greater than

180 days. The impairment recognised represents the difference between the carrying amount of these trade receivables and the present value of the expected

settlement proceeds. The Group does not hold any collateral over these balances.2010 2009

Ageing of impaired trade receivables US$’000 US$’000

From 0 – 30 days – –

From 31 – 90 days – –

From 91 – 180 days – –

more than 180 days 1,320 1,637

Total 1,320 1,637

2010 2009

Movement in the allowance for doubtful debts US$’000 US$’000

Balance at the beginning of the year 1,637 2,761

Amounts written off as uncollectable (2,288) (4,177)

Increase in allowance recognised in profit or loss 1,910 2,423

Exchange differences 61 630

Balance at the end of the year 1,320 1,637

In determining recoverability of trade receivables, the Group considers any change in the credit quality of the trade receivable from the date credit was initially

granted up to the reporting date. The concentration of credit risk is limited due to the customer base being large and unrelated except for one customer which

accounts for 13% of Group revenue, (US$75.9 million) which is included in the maritime services segment. The directors believe that there is no further credit

provision required in excess of the allowance for doubtful debts.

The directors consider that the carrying amount of trade and other receivables approximates their fair value.

48



22 Bank loans and overdraftsYear ended Year ended


2010 2009

Interest US$’000 US$’000

Unsecured borrowings

Bank overdrafts 12.4% to 15.45% p.a. 6,479 227

Secured borrowings

Bank loans

BNDES – $Real 4.5% to 14.0% p.a. 26,789 5,089

BNDES – linked to US$ 2.64% to 5% p.a. 198,192 230,563

IFC – $Real 14.09% p.a. 4,888 5,458

IFC – US$ 2.99% to 8.49% p.a. 9,813 14,080

Eximbank – US Dollar 2.43% p.a 14,818 –

Finimp – US Dollar 2.12% to 2.27% p.a. 4,051 –

Banco do Brasil – linked to US $ 3.10% p.a 49,131 –

307,682 255,190

Total borrowings 314,161 255,417

The borrowings are repayable as follows:

On demand or within one year 25,565 18,146

In the second year 26,194 20,545

In the third to fifth years inclusive 82,187 60,166

After five years 180,215 156,560

Total borrowings 314,161 255,417

Amounts due for settlement within 12 months (25,565) (18,146)

Amounts due for settlement after 12 months 288,596 237,271

Analysis of borrowings by currency:$Real

linked to

$Real US Dollars US Dollars Total

US$’000 US$’000 US$’000 US$’000

31 December 2010

Bank overdrafts 6,479 – – 6,479

Bank loans 31,677 247,323 28,682 307,682

Total 38,156 247,323 28,682 314,161

31 December 2009

Bank overdrafts 227 – – 227

Bank loans 10,547 230,563 14,080 255,190

Total 10,774 230,563 14,080 255,417

The Group’s main sources of financing are:

BNDES (Banco Nacional de Desenvolvimento Economico e Social): As agent for the “FMM” (Fundo de Marinha Mercante) the BNDES finances tug boat and

platform supply vessel construction and secure mortgages on the vessels financed. Loans received from the BNDES are $Real denominated loans linked to the

US Dollar and are monetarily corrected by the movement in the US Dollar/$Real exchange rate and bear interest of between 2.64% and 5.0% per annum.

49


22 Bank loans and overdrafts (continued)

The amounts outstanding at 31 December 2010 are repayable over periods varying up to 21 years. The BNDES also finances equipment for Logistic operations

with $Real denominated loans and bear interest rates between 4.5% and 14% a year.

Banco do Brasil acts as agent for the “FMM” (Fundo de Marinha Mercante). Banco do Brasil finances platform supply vessel construction and secure mortgages on

the vessels financed. Loans received from the Banco do Brasil are $Real denominated loans linked to the US Dollar and are monetarily corrected by the

movement in the US Dollar/$Real exchange rate and bear a fixed interest rate of 3.1% per annum.

These loans are in a grace period with repayments beginning in January 2012 and are repayable over periods varying up to 18 years. The loans were contributed

by Magallanes Navegacao Brasileira when the offshore joint venture was formed in 2010.

IFC (International Finance Corporation); The IFC finances the Group’s two container terminals, Tecon Rio Grande and Tecon Salvador. The majority of these loans

are project finance to fund the expansion of the container terminal at Tecon Rio Grande and have no recourse to other companies in the Group. US dollar

denominated loans consist of variable rate and fixed rate loans. Variable rate loans bear interest at between six month Libor per annum plus 2.5% and six month

Libor plus 3.5%. US dollar denominated fixed rate loans bear interest of 8.49% per annum. Real denominated loans bear interest at 14.09% per annum. The

amounts outstanding at 31 December 2010 are repayable over periods varying up to 6 years.

The Export-Import Bank of China (Eximbank) finances Tecon Rio Grande’s equipment. The amounts outstanding at 31 December 2010 are repayable over periods

varying up to 10 years and bear interest of six month libor per annum plus 1.7%. The loans are secured by a bank guarantee with Eximbank as beneficiary at a

cost of 2% per year.

The Banco Itau BBA S.A. credit line, Finimp, finances equipment for Tecon Rio Grande. The amounts outstanding at 31 December 2010 are repayable over periods

varying up to 5 years and bears interest of six month libor per annum plus 1.63%. There is also a 1.75% annual commission.

The weighted average interest rates paid were as follows:


2010 2009

Bank overdrafts 14.8% 13.3%

Bank loans in US Dollars and linked to the US Dollar 3.3% 3.2%

Bank loans in Real 8.5% 11.0%

At 31 December 2010, the Group had available US$389.4 million of undrawn committed borrowings facilities available. For each disbursement there are a set of

conditions precedent that must be met (2009: US$102.3 million). Included in this amount is 50% of a US$670 million financing agreement between our joint

venture, Wilson Sons Ultratug offshore and the BNDES as agent for the Fundo da Marinha Mercante (FMM) signed in September 2010. The financing is intended

to be used to construct 13 offshore vessels to be constructed in our shipyards to be delivered between 2011 and 2015. Construction has started on 3 of these

vessels and will be repayable over 18 years.

Six of the Group’s platform supply vessels have a guarantee involving receivables from the client that has contracted the vessels. Funds received from the client

pass through a special account before being immediately transferred to the Company’s corporate account.

The subsidiaries Tecon Rio Grande and Tecon Salvador have specific restrictive clauses in their financing contracts with financial institutions related, basically, to

the maintenance of liquidity ratios. At 31 December 2010, the Group was in accordance with all clauses of these contracts.

23 Derivative financial instruments

Currency swaps

The Group may engage in forward and swap operations to mitigate and manage the cash flow exposure to change in foreign exchange rates of loan agreements

denominated in foreign currency (in US Dollars) in $Real functional currency entities.

There were no such contracts at 31 December 2010 or 31 December 2009.

50



24 Deferred tax

The following are the major deferred tax liabilities and assets recognised by the Group and movements thereon during the current and prior reporting period.

Exchange Retranslation of

Accelerated tax variance on Other non-current asset

depreciation loans differences valuation Total

US$’000 US$’000 US$’000 US$’000 US$’000

At 1 January 2009 (13,243) 1,906 10,524 (4,024) (4,837)

(Charge)/credit to income (8,351) (15,156) 840 35,086 12,419

Exchange differences – 3 1,774 — 1,777

At 1 January 2010 (21,594) (13,247) 13,138 31,062 9,359

(Charge)/credit to income (5,869) (1,484) 1,415 6,613 675

Deferred tax booked on creation of joint venture 5,058 2,885 216 (4,686) 3,473

Exchange differences – 35 308 – 343

At 31 December 2010 (22,405) (11,811) 15,077 32,989 13,850

Certain tax assets and liabilities have been offset. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes.

2010 2009

US$’000 US$’000

Deferred tax liabilities (15,073) (16,140)

Deferred tax assets 28,923 25,499

13,850 9,359

At the balance sheet date the Group had unused tax losses of US$30,487,000 (2009: US$23,664,000) available for offset against future profits in the company

in which they arose. No deferred tax asset has been recognised in respect of US$10,366,000 (2009: US$8,046,000) due to the unpredictability of future profit

streams.

Deferred tax arises on Brazilian property, plant and equipment held in US dollar functional currency businesses. Deferred tax is calculated on the difference

between the historical US Dollar balances recorded in the Group’s accounts and the $Real balances used in the Group’s Brazilian tax calculations.

Deferred tax on exchange losses arises from exchange losses on the Group’s US Dollar and $Real denominated loans linked to the US Dollar that are not

deductible for tax in the period they arise.

25 Obligations under finance leasesMinimum Present value of minimum

lease payments lease payments

2010 2009 2010 2009

US$’000 US$’000 US$’000 US$’000

Amounts payable under finance leases

Within one year 5,921 5,263 4,847 3,902

In the second to fifth years inclusive 7,098 9,950 6,305 8,653

After five years – – – –

13,019 15,213 11,152 12,555

Less future finance charges (1,867) (2,658) N/A N/A

Present value of lease obligations 11,152 12,555

Less: Amounts due for settlement within 12 months (shown under current liabilities) (4,847) (3,902)

Amount due for settlement after 12 months 6,305 8,653

51


25 Obligations under finance leases (continued)

It is the Group’s policy to lease certain of its fixtures and equipment under finance leases. The average lease term is 4 years.

For the year ended 31 December 2010 the average effective borrowing rate was 15.87% (2009: 15.21%). Interest rates are fixed at contract date.

All leases include a fixed repayment and a variable finance charge linked to the Brazilian interest rate. Interest rates range from 10.05% to 20.39%.

All lease obligations are denominated in Brazilian Real.

The Group’s obligations under finance leases are secured by the lessors’ rights over the leased assets.

26 Trade and other payables2010 2009

US$’000 US$’000

Trade creditors 52,302 47,949

Amounts due to construction contract customers (note 20) 17,073 12,400

Other taxes 16,657 11,847

Accruals and deferred income 10,153 8,868

Share based payment liability 30,471 17,626

126,656 98,690

Trade creditors and accruals principally comprise amounts outstanding for trade purposes and ongoing costs.

The average credit period for trade purchases is 54 days (2009: 60 days). For most suppliers interest is charged on outstanding trade payable balances at various

interest rates. The Group has financial risk management policies in place to ensure that payables are paid within the credit timeframe.

The directors consider that the carrying amount of trade payables approximates their fair value.

27 ProvisionsUS$’000

At 1 January 2010 9,831

Addition of provision in the year 4,464

Utilisation of provision (2,575)

Exchange difference 569

At 31 December 2010 12,289

Included in current liabilities –

Included in non-current liabilities 12,289

12,289

Provisions comprise legal claims relating to civil cases, tax cases and legal claims by former employees.

Analysis of provisions by type.2010 2009

US$’000 US$’000

Civil and environmental cases 1,128 781

Tax cases 261 921

Labour claims 10,900 8,129

12,289 9,831

52



27 Provisions (continued)

Civil and environment cases: Indemnification for damages caused by floating craft accidents. These claims relate to environmental causes.

Labour claims: These lawsuits relate to employee claims about salary differences, unpaid overtime worked, labour risks and work accident claims.

Tax cases: Brazilian taxes that the Group and its advisors consider incorrectly applied against the Group and are contesting in legal actions.

Other non-current assets of US$6.6 million (2009: US$7.9 million) represent legal deposits required by the Brazilian legal authorities as security to contest legal

actions.

28 Share capital2010 2009

US$’000 US$’000

Authorised

50,060,000 ordinary shares of 20p each 16,119 16,119

Issued and fully paid

35,363,040 ordinary shares of 20p each 11,390 11,390

The company has one class of ordinary shares which carry no right to fixed income.

Share capital is converted at the exchange rate prevailing at 31 December 2002, the date at which the Group’s presentational currency changed from Sterling to

US$, being US$1.61 to £1.

29 Joint venture formation

On 28 May 2010 the Group finalised the offshore joint venture “Wilson, Sons Ultratug Participacoes S.A”. with Remolcadores Ultratug Ltda, a subsidiary of

Ultratug Ltda, a Chilean Group.

The Group contributed its 50% participation of the joint venture with the issued shares of Wilson, Sons Offshore S.A., the company that owns and operates the

Group’s offshore supply vessels. The Ultratug Group contributed its 50% participation of the joint venture with the issued shares of Magallanes Navegacao

Brasileira S.A., the owner of the Ultratug Group’s offshore operations in Brazil and US$14.3 million in cash.

A gain of US$20.4 million was realised on formation of the joint venture as set out below.

US$’000

Wilsons Sons share of fair value of the assets contributed by Magallanes 16,165

Less Carrying value of Wilsons Sons Offshore S.A. (6,208)

Consolidation elimination of intercompany profit 10,450

Wilsons Sons contribution at net book value 4,242

Total gain on joint venture formation 20,407

Consolidation elimination of intercompany profit represents profits on the construction of PSVs in the Groups shipyards previously eliminated on consolidation.

53


29 Joint venture formation (continued)

Change in net assets due to the joint venture transaction.US$’000

Cash and cash equivalents 5,040

Property, plant and equipment (6,386)

Other non-current assets 49

Inventories (515)

Trade and other receivables (2,639)

Borrowings 12,002

Trade and other payables 12,856

Total 20,407

30 Acquisition of non-controlling interest

On 16 June 2010 the Group acquired the remaining 25% non-controlling interest in our onshore base manager and logistics business, Brasco Logistica Offshore

Ltda for a cash consideration of US$9.0 million.

As there was no change in control of the subsidiary, the difference between the consideration paid and the net assets acquired has been recognised in equity.

US$’000

Net assets acquired 4,155

Total consideration paid 9,005

Negative movement recognised in equity (4,850)

Negative movement attributable to equity holders of parent (2,828)

Negative movement attributable to non-controlling interest (2,022)

54



31 Notes to the cash flow statementYear ended Year ended


2010 2009

US$’000 US$’000

Reconciliation from profit before tax to net cash from operating activities


Profit realised on formation of joint venture (20,407) –

Investment revenues (17,982) (35,613)

Other gains and losses (22,460) (34,305)

Finance costs 11,611 9,411

Operating profit 67,920 79,313

Adjustments for:

Depreciation of property, plant and equipment 42,435 31,917

Amortisation of intangible assets 488 149

Share based payment expense 16,545 17,174

Gain on disposal of property, plant and equipment (90) (470)

Increase in provisions 2,458 1,377

Operating cash flows before movements in working capital 129,756 129,460

Decrease/(increase) in inventories 25 (11,286)

Increase in receivables (28,487) (25,440)

Increase in payables 9,117 9,748

Decrease/(increase) in other non-current assets 3,922 (2,456)

Cash generated by operations 114,333 100,026

Income taxes paid (20,908) (38,550)

Interest paid (7,887) (9,238)

Net cash from operating activities 85,538 52,238

Cash and cash equivalents

Cash and cash equivalents comprise cash held by the Group and short-term bank deposits with an original maturity of three months or less. The carrying amount

of these assets approximates their fair value.

Private investment funds

The Group has investments in private investment funds that are consolidated in the financial statements as cash equivalents.

The private investment funds are considered as cash equivalents as despite the certificates of deposit having maturities up to March 2015, 86% of funds invested

are available on call and the balance on one day’s notice. The intention of the Group is that these resources will be used in the trading activities of the Group.

These private investment funds comprise certificates of deposit and equivalent instruments with final maturities ranging from January 2011 to September 2015.

The securities included in the portfolio of the private investment funds have daily liquidity and are marked to market on a daily basis against current earnings.

These private investment funds do not have significant financial obligations.

Any financial obligations are limited to service fees to the asset management company employed to execute investment transactions, audit fees and other similar

expenses.

Cash and cash equivalents held in Brazil amount to US$85.8 million (2009: US$94.9 million).

Cash equivalents are held for the purpose of meeting short-term cash commitments and not for cash investment purposes.

Additions to plant and equipment during the year amounting to US$1.9 million (2009: US$8.9 million) were financed by new finance leases.

55


32 Contingent liabilities

In the normal course of business in Brazil, the Group continues to be exposed to numerous local legal claims. It is the Group’s policy to vigorously contest such

claims, many of which appear to have little substance in merit, and to manage such claims through its legal advisers. The total estimated contingent claims at

31 December 2010 is US$53.4 million (2009: US$60.4 million). These have not been provided for as the Directors and the Group’s legal advisors do not

consider that there is any probable loss. Contingent liabilities relate to labour, civil and tax claims.

33 Cash-settled share-based payments

The Group issues to certain employees share appreciation rights in respect of the Group’s long-term incentive plan “LTIP” that require the Group to pay the

intrinsic value to the employee at the date of exercise.

The Group operates two long-term incentive plans, the Ocean Wilsons Holdings scheme and the Wilson Sons Limited scheme.

Ocean Wilsons Holdings Limited LTIP

The Company implemented a cash settled phantom option scheme that was approved by shareholders at a Special General Meeting held on 19 April 2007.

The scheme is for selected senior management and the options provide for the option holder to receive on exercise the difference between the option price of

US$5.66 and the lower of US$19.98, being the market capitalisation of the Wilson Sons at the date of the IPO per OWHL share and the market value of Wilson

Sons per OWHL share at the time of excercise.The awards vest in four tranches from April 2009 to April 2012 and expire in April 2016.

No further options will be granted under the scheme. In May 2009 participants forfeited 620,273 options in return for a guaranteed deferred bonus scheme to

be paid in 4 tranches from June 2009 to June 2012. Each tranche is US$2.2 million.

Details of the share options outstanding during the year as follows:2010 2009

Number of Number of

share options share options

Outstanding at the beginning of the year 856,598 1,757,151

Granted during the year – –

Forfeited during the year – (620,273)

Exercised during the year (280,280) (280,280)

Outstanding at the end of the year 576,318 856,598

The weighted average equivalent share price at the date of exercise during the period was US$18.86.

The movement of the accrual relating to the plan is as follows:2010 2009

US$’000 US$’000

Liability at 1 January 7,035 3,296

Charge for the year 3,341 7,750

Exercise of options (3,700) (4,011)

Liability at 31 December 6,676 7,035

The Group has recorded liabilities of US$6,676,000 (2009: US$7,035,000) in respect of this scheme. Fair value is determined by using the Binomial model using

the assumptions noted in the table below.2010 2009

Weighted average option price $5.66 $5.66

Expected volatility 32% 45% – 50%

Average expected life 10 years 10 years

Average risk free rate 0.1 – 0.4% 0.1 – 1.5%

Expected dividend yield 1.8% 2.2%

Expected volatility was determined by calculating the historical volatility of the Group’s share price. The expected life used in the model has been adjusted, based

on managements best estimate for exercise restrictions and behavioural considerations.

There were no exercisable options at year end.

56



33 Cash-settled share-based payments (continued)

Wilson Sons Limited LTIP

On 9 April, 2007, the boards of Ocean Wilsons Holdings Limited and Wilson Sons Limited approved a stock option plan which allows for the grant of phantom

options to eligible employees selected by the Wilson Sons Limited Board. The options will provide cash payments, on exercise, based on the number of options

multiplied by the growth in the price of a Wilson Sons Limited Brazilian Depositary Receipt “BDR” between the date of grant (the Base Price) and the date of

exercise (the “Exercise Price”). The plan is a Brazilian Real denominated scheme and options were issued at R$ 23.74 during 2007. A further 135,000 options

were issued under the plan at R$18.70 in 2008 and 2009. The awards vest in four tranches from two to six years from date of issue.

Details of the share options outstanding during the year as follows:

2010 2009

Number of Number of

share options share options

Outstanding at the beginning of the year 3,912,760 3,892,760

Granted during the year – 20,000

Forfeited during the year (7,500) –

Expired during the year (7,500) –

Outstanding at the end of the year 3,897,760 3,912,760

The movement of the accrual relating to the plan is as follows:

2010 2009

US$’000 US$’000

Liability at 1 January 10,591 1,167

Charge for the year 13,204 9,424

Exercise of options – –

Liability at 31 December 23,795 10,591

The group has recorded liabilities of US$23,795,000 (2009: US$10,591,000). Fair value is determined by using the Binomial model using the assumptions noted

in the table below.

2010 2009

Weighted average option price for awards made in 2007 R$23.74 R$23.74

Weighted average option price for awards made in 2008 and 2009 R$18.70 R$18.70

Expected volatility 26% – 32% 34%

Expected life 10 years 10 years

Risk free rate 8.60% 9.49%

Expected dividend yield 1.8% 2.2%

Expected volatility was determined with reference to the historical volatility of the OWHL Group share price. The expected life used in the model has been

adjusted, based on managements best estimate for exercise restrictions and behavioural considerations.

The fair value of the Ocean Wilsons Holdings Limited and Wilson Sons Limited schemes increased in value principally due to the increase in the Wilson Sons

Limited share price from R$21.48 at 31 December 2009 to R$32.00 at 31 December 2010.

At year end there were 1,922,630 exercisable options.

57


34 Operating lease arrangements2010 2009

US$’000 US$’000

The Group as lessee

Minimum lease payments under operating leases recognised in income for the year 14,528 12,440

At the balance sheet date, the minimum amount due in 2010 by the Group for future minimum lease payments under cancellable operating leases was

US$13,668,000 (2009: $8,390,000).

Lease commitments for land and buildings over 5 years comprise the minimum contractual lease obligations between Tecon Rio Grande and the Rio Grande port

authority the Group and the Salvador port authority. The Tecon Rio Grande concession expires in 2022 and Tecon Salvador in 2025.

Tecon Rio Grande guaranteed payments consist of two elements; a fixed rental, plus a fee per 1,000 containers moved based on forecast volumes. The amount

shown in the accounts is based on the minimum volume forecast. Volumes are forecast to rise in future years. If container volumes moved through the terminal

exceed forecast volumes in any given year, additional payments will be required.

Tecon Salvador guaranteed payments consists of three elements; a fixed rental, a fee per container moved based on minimum forecast volumes and a fee per

ton of non-containerised cargo moved based on minimum forecast volumes.

At the balance sheet date, the Group had outstanding commitments for future minimum lease payments under non-cancellable/operating leases, which fall due

as follows:

2010 2009

US$'000 US$'000

Within one year 2,211 1,453

In the second to fifth year inclusive 9,581 7,262

After five years 8,844 6,295

20,636 15,010

Non-cancellable lease payments represent rental payments by the Group for the bonded warehouse used by EADI Santo Andre.

The unexpired lease term at 31 December 2010 is 9 years and 4 months and rental payments are corrected by a Brazilian general inflation index.

58



35 Commitments

At 31 December 2010 the Group had entered into thirteen commitment agreements with respect to thirteen separate trading investments. These commitments

relate to capital subscription agreements entered into by Ocean Wilsons Investments Limited.

The details of these commitments are as follows:


Outstanding Outstanding

At 31 December At 31 December

Commitment 2010 2009

$’000 US$’000 US$’000

Expiry date

15 May 2011 3,000 150 840

30 June 2011 991 78 161

31 October 2012 3,000 2,543 3,470

31 October 2012 5,000 271 271

01 February 2013 5,000 3,250 –

13 March 2013 5,000 1,906 3,342

30 March 2013 5,000 1,363 –

21 May 2013 4,801 2,597 3,834

22 October 2013 5,000 3,625 4,250

02 December 2013 5,000 3,813 –

08 December 2013 5,000 4,127 5,000

31 March 2014 5,000 3,400 –

23 February 2015 5,000 3,454 –

Total 56,792 30,577 21,168

36 Retirement benefit schemes

Defined contribution schemes

The Group operates defined contribution retirement benefit schemes for all qualifying employees of its Brazilian business. The assets of the scheme are held

separately from those of the Group in funds under the control of independent managers.

The total cost charged to the statement of comprehensive income of US$885,000 (2009: US$728,000) represents contributions payable to the scheme by the

Group at rates specified in the rules of the plan.

59


37 Related party transactions

Transactions between this company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.

Transactions between the group and its associates, joint ventures and other investments are disclosed below.

Dividends received/ Amounts paid/

Revenue of services Cost of services


2010 2009 2010 2009

US$’000 US$’000 US$’000 US$’000

Joint ventures

1. Allink Transportes Internacionais Limitada 1,308 618 (3) –

2. Consórcio de Rebocadores Barra de Coqueiros 266 257 (26) (5)

3. Consórcio de Rebocadores Baía de São Marcos 2,443 3,116 (20) (6)

4. Dragaport Engenharia – 344 – –

5. Wilson Sons Ultratug 1,623 – (590) –

6. Wilson Sons Offshore 17,573 – (2,241) –

7. Magallanes Navegacão Brasileira 17,751 – (1,792) –

Others

8. Hanseatic Asset Management – – (2,492) (2,326)

9. Gouvea Vieira Advogados – – (94) (103)

10. CMMR Intermediacao Comercial Limitada – – (338) (343)

11. Jofran Services – – (152) (60)

12. Frag Consulting – – (70) (50)

13. P Hamilton-Hill – 273 – –

Amounts owed Amounts owed

by related parties to related parties


2010 2009 2010 2009

US$’000 US$’000 US$’000 US$’000

Joint ventures

1. Allink Transportes Internacionais Limitada 287 3 – –

2. Consórcio de Rebocadores Barra de Coqueiros 7 134 – –

3. Consórcio de Rebocadores Baía de São Marcos 1,722 2,083 – (92)

4. Dragaport Engenharia – – – –

5. Wilson Sons Ultratug 8,915 – – –

6. Wilson Sons Offshore 49 – (15,342) –

7. Magallanes Navegacão Brasileira – – (14,020) –

Others

8. Hanseatic Asset Management – – (439) (207)

9. Gouvea Vieira Advogados – – – –

10. CMMR Intermediacao Comercial Limitada – – – –

11. Jofran Services – – – –

12. Frag Consulting – – – –

13. P Hamilton-Hill – 2,642 – –

60



37 Related party transactions (continued)

1. Mr A C Baião is a shareholder and Director of Allink Transportes Internacionais Limitada. Allink Transportes Internacionais Limitada is 50% owned by the

Group and rents office space from the Group.

1.-6. The transactions with the joint ventures are disclosed as a result of proportionate amounts not eliminated on consolidation. The proportion of ownership

interest in each joint venture is described on note 17.

7. Magallanes Navegacão Brasileira is our partner in the offshore joint venture.

8. Mr W H Salomon is Chairman of Hanseatic Asset Management. Fees were paid to Hanseatic Asset Management for acting as investment managers of the

Group’s investment portfolio and administration services.

9. Dr J F Gouvêa Vieira is a managing partner in the law firm Gouvêa Vieira Advogados. Fees were paid to Gouvêa Vieira Advogados for legal services.

10. Mr C M Marote is a shareholder and Director of CMMR Intermediacao Comercial Limitada. Fees were paid to CMMR Intermediacao Comercial Limitada for

consultancy services.

11. Mr J F Gouvêa Vieira is a Director of Jofran Services. Directors fees and consultancy fees were paid to Jofran Services.

12. Mr F Gros was a Director of Frag Consulting. Directors fees were paid to Frag Consulting.

13. Mr P Hamilton-Hill was a non-controlling shareholder in Brasco. A loan was made to Mr P Hamilton-Hill.

Remuneration of key management personnel

The remuneration of the executive directors and other key management of the Group, is set out below in aggregate for the categories specified in IAS 24 Related

Party Disclosures.


2010 2009

US$'000 US$'000

Short-term employee benefits 11,368 10,891

Other long-term employee benefits 2,669 1,161

Post-employment benefits 2,722 1,680

Share-based payment 16,545 17,174

33,304 30,906

38 Financial instruments

Capital risk management

The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern. The capital structure of the Group consists of debt,

which includes the borrowings disclosed in note 22, cash and cash equivalents and equity attributable to equity holders of the parent comprising issued capital,

reserves and retained earnings and the consolidated statement of changes in equity.

The Group borrows to fund capital projects and looks to cash flow from these projects to meet repayments. Working capital is funded through cash generated by

operating revenues.

Externally imposed capital requirement

The Group is not subject to externally imposed capital requirements.

Significant accounting policies

Details of significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income

and expense are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 2 to the financial statements.

Categories of financial instrumentsYear ended Year ended

2010 2009

US$’000 US$’000

Financial assets

Designated as fair value through profit or loss 260,544 238,662

Receivables (including cash and cash equivalents and other non-current assets) 300,788 319,655

Financial liabilities

Amortised cost (435,312) (354,815)

61


38 Financial instruments (continued)

Financial risk management objectives

The Group’s Corporate Treasury function provides services to the business, co-ordinates access to domestic and international financial markets and manages the

financial risks relating to the operations of the Group through internal reports. These risks include market risk, (including currency risk, interest rate risk and price

risk) credit risk and liquidity risk.

The Group may use derivative financial instruments to hedge these risk exposures, with Board approval.

The Group does not enter into trade financial instruments, including derivative financial instruments for speculative purposes.

Credit risk

The Group’s principal financial assets are cash, trade and other receivables and trading investments.

The Group’s credit risk is primarily attributable to its bank balances, trade receivables and investments. The amounts presented as receivables in the balance

sheet are net of allowances for doubtful receivables as outlined above.

The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies. The credit

risk on investments held for trading is limited because the counterparties with whom the Group transacts are regulated institutions or banks with high credit

ratings.

The company’s appointed investment manager, Hanseatic Asset Management LBG, evaluates the credit risk on trading investments prior to and during the

investment period.

The Group has no significant concentration of credit risk except for one large customer, which makes up 13% of revenue.

Ongoing credit evaluation is performed on the financial condition of accounts receivable.

Market risk

The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates.

Foreign currency risk management

The Group undertakes certain transactions denominated or linked to foreign currencies and therefore exposures to exchange rate fluctuations arise. The Group

operates principally in Brazil with a substantial proportion of the Group’s revenue, expenses, assets and liabilities denominated in the Real. Due to the cost of

hedging the Real, the Group does not normally hedge its net exposure to the Real as the Board does not consider it economically viable.

The carrying amount of the Group’s foreign currency denominated monetary assets and monetary liabilities at the reporting date are as follows:

Liabilities Assets

2010 2009 2010 2009

US$’000 US$’000 US$’000 US$’000

Real 159,567 129,292 324,497 327,593

Sterling 652 530 30,990 44,446

Euro – – 1,970 1,829

Yen – – 4,505 3,815

Singapore dollar – – 5,091 –

160,219 129,822 367,053 377,683

62




Foreign currency sensitivity analysis

The Group is primarily exposed to unfavourable movements in the Brazilian Real on its Brazilian liabilities, and to unfavourable movements in the British Pound

on its Sterling investments.

The following table details the Group’s sensitivity to a 10% increase and decrease in the US Dollar against these respective foreign currencies. 10% is the

sensitivity used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonable

possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their

translation at the year end for a 10% change in foreign currency rates. In the following table a positive number indicates an increase in profit and equity where

the US Dollar hypothetically strengthens against the Brazilian Real or where the US Dollar weakens against the British pound. A 10% weakening in the US Dollar

against the Brazilian Real and a 10% strengthening against the British pound would give an equal and opposite effect.

Real impact Sterling impact

2010 2009 2010 2009

US$’000 US$’000 US$’000 US$’000

Profit or loss 9,140 27,779 (3,023) (4,369)

Total equity 20,414 37,733 (3,023) (4,369)

The Brazilian Real foreign currency impact is mainly attributable to the exposure of outstanding Brazilian Real receivables and payables at year end in the Group.

The Sterling currency impact is mainly attributable to the exposure of sterling denominated investments.

In management’s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk as the year end exposure does not reflect the

exposure during the year.

Interest rate risk management

The Group is exposed to interest rate risk as entities in the Group borrow funds at both fixed and floating interest rates.

The Group borrows from the BNDES (Banco Nacional de Desenvolvimento Economico e Social) and Banco do Brasil to finance vessel construction. These loans

are fixed interest rates loans linked to the US Dollar. Due to the favourable rates offered by these institutions, in the Group’s opinion, there is minimal market

interest rate risk.

The Group’s strategy for managing interest rate risk is to maintain a balanced portfolio of fixed and floating interest rates in order to balance both cost and

volatility. The Group may use derivative instruments to reduce cash flow interest rate attributable to interest rate volatility.

As at 31 December 2010 the Company had no outstanding interest rate swap contracts.

63



Interest rate sensitivity analysis

The sensitivity analyses below have been determined based on the exposure to interest rates for non-derivative instruments at the balance sheet date.

For floating rate liabilities and investments, the analysis is prepared assuming the amount of the liability outstanding or cash invested at balance sheet date was

outstanding or invested for the whole year.

A 1% increase or decrease is used when reporting US dollar interest rate risk internally to key management personnel and represents management’s assessment

of the reasonably possible change in interest rates.

If US Dollar interest rates had been 1% lower and all other variables held constant, the Group’s profit for the year ended 31 December 2010 would decrease by

US$0.7 million (2009: decrease by US$1.5 million). This is mainly attributable to the Group’s exposure to interest rates on its variable rate borrowings and cash

investments. If US Dollar interest rates had been 1% higher this would give an equal and opposite effect.

A 3% increase or decrease is used when reporting Brazilian interest rate risk internally to key management personnel and represents management’s assessment

of the reasonably possible change in interest rates.

If Brazilian Real interest rates had been 3% higher and all other variables held constant, the Group’s profit before tax for the year ended 31 December 2010

would increase by US$2.2 million (2009: increase by US$3.1 million). This is mainly attributable to the Group’s exposure to interest rates on its cash investments.

If Brazilian Real interest rates had been 3% lower this would give an equal and opposite effect.

The Group has floating rate financial assets consisting of bank balances principally denominated in US Dollars and Brazilian Real that bear interest at rates based

on the banks floating interest rate.

Market price sensitivity

The Group is exposed to equity price risks arising from equity trading investments.

The trading investments represent investments in listed equity securities, funds and unquoted equities and that present the Group with opportunity for return

through dividend income and trading gains. They have no fixed maturity or coupon rate. The fair values of these securities are based on quoted market prices

where available.

By the nature of its activities the Group’s investments are exposed to market price fluctuations. However the portfolio as a whole does not correlate exactly to any

stock exchange index, as it is invested in a diversified range of markets. The investment manager and the Board monitor the portfolio valuation on a regular

basis and consideration is given to hedging the portfolio against large market movements.

The sensitivity analysis below has been determined based on the exposure to market price risks at year end and shows what the impact would be if market

prices had been 10% higher or lower at the end of the financial year. The amounts below indicate an increase in profit and loss and total equity where market

prices increase by 10%. A fall in market prices of 10% would give rise to an equal fall in profit and loss and total equity.

2010 2009

US$’000 US$’000

Profit or loss 26,054 23,866

Total equity 26,054 23,866

Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Group. The Group has adopted a

policy of only dealing with creditworthy counterparties as a means of mitigating the risk of financial loss from defaults.

The Group’s sales policy is subordinated to the credit sales rules set by management, which seeks to mitigate any loss from customers’ delinquency.

Trade receivables consist of a large number of customers except for one large customer, which makes up 13% of revenue. Ongoing credit evaluation is

performed on the financial condition of accounts receivable.

64




Liquidity risk management

Ultimate responsibility for liquidity risk management rests with the Board of Directors. The Group manages liquidity risk by maintaining adequate reserves,

banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets

and liabilities.

Liquidity and interest risk tables

The following tables detail the Group’s remaining contractual maturity for its non-derivative financial liabilities. The tables have been drawn up based on the

undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The table includes both interest and

principal cash flows.

Weighted

average

effective Less than

interest rate 12 months 1-5 years 5+ years Total

% US$’000 US$’000 US$’000 US$’000

2010

Non-interest bearing – 130,010 – – 130,010

Finance lease liability 15.87% 5,921 7,098 – 13,019

Variable interest rate instruments 4.73% 5,261 19,669 7,851 32,781

Fixed interest rate instruments 3.95% 20,304 88,712 172,364 281,380

161,496 115,479 180,215 457,190

2009

Non-interest bearing – 99,543 – – 99,543

Finance lease liability 15.21% 5,263 9,950 – 15,213

Variable interest rate instruments 3.47% 3,701 4,966 1,635 10,302

Fixed interest rate instruments 3.99% 21,388 104,172 184,248 309,808

129,895 119,088 185,883 434,866

The Group has access to financing facilities, the total unused amount which is US$389.4 million at the balance sheet date. The Group expects to meet its other

obligations from operating cash flows and proceeds of maturing financial assets.

Fair value of financial instruments

The fair value of non-derivative financial assets traded on active liquid markets are determined with reference to quoted market prices.

The carrying amounts of financial assets and financial liabilities recorded at amortised cost in the financial statements approximate their fair value.

65



Fair value measurements recognised in the statement of financial position

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into levels 1 to 3

based on the degree to which fair value is observable:

Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability,

either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

Level 3 fair value measurements are those derived from valuation techniques that include inputs for the assets or liability that are not based on observable data

(unobservable inputs).

2010 Level 1 Level 2 Level 3 Total

US$’000 US$’000 US$’000 US$’000

Financial assets at FVTPL

Non-derivative financial assets for trading 80,831 145,195 34,518 260,544

2009 Level 1 Level 2 Level 3 Total

US$’000 US$’000 US$’000 US$’000

Financial assets at FVTPL

Non-derivative financial assets for trading 30,326 177,675 30,661 238,662

2010 2009

Reconciliation of Level 3 fair value measurements of financial assets: US$’000 US$’000

Balance at 1 January 2010 30,661 16,483

Transfer out of Level 3 (10,009) –

Total gains or losses in statement of comprehensive income (421) 4,329

Purchases and drawdowns of financial commitments 15,101 9,898

Sales and repayments (814) (49)

Balance at 31 December 2009 34,518 30,661

39 Subsequent event

On 26 January 2011 Intermarítima Terminais Ltda (“Intermarítima”) exercised a call option granted by the Group to buy 7.5% of the ordinary shares of Tecon

Salvador S.A., a subsidiary of the Company, at a price of US$6.7million. The right of Intermarítima to exercise this option was subject to the Company gaining the

right to operate exclusively in the area of Salvador’s Port referred to as “Ponta Norte”.

Year to Year to Year to Year to Year to

31 December 31 December 31 December 31 December 31 December

2010 2009 2008 2007 2006

US$’000 US$’000 US$’000 US$’000 US$’000

Closing rates of exchange – R$ to US$ 1.67 1.74 2.34 1.77 2.14

Statement of comprehensive income

Group revenue 575,551 477,888 498,285 404,046 334,109

Group operating profit 67,920 79,313 98,339 58,508 61,433

Profit before tax 117,158 139,820 31,550 303,410 61,433

Income tax expense (30,564) (31,228) (38,641) (25,723) (20,765)

Profit for the year 86,594 108,592 (7,091) 277,687 40,668

Profit for the year attributable to:

Equity holders of parent 56,879 70,200 (26,700) 258,065 56,077

Non-controlling interests 29,715 38,392 19,609 19,622 806

86,594 108,592 (7,091) 277,687 56,883

US$’000 US$’000 US$’000 US$’000 US$’000

Balance Sheet

Net assets

Brazilian interests 339,399 297,835 206,539 195,907 146,135

Investments held for trading 260,544 238,662 209,994 272,834 73,192

Other net assets 129,277 136,748 147,558 144,317 6,314

729,220 673,245 564,091 613,058 225,641

Attributable net assets – per share

Brazilian interests – book amount 960c 842c 584c 554c 413c

Other assets – book and market amount 1102c 1062c 1011c 1180c 225c

2062c 1904c 1595c 1734c 638c

Key Statistics

Earnings per share 160.8c 198.5c (75.5c) 729.8c 158.6c

Cash dividends per share paid 42.0c 30.0c 40.0c 24.0c 20.0c

Mid-market quotation at end of year 1382p 865p 460p 792p 548p

Mid-market quotation at end of year in US Dollars 2155c 1378c 666c 1570c 1073c

Statistical Statement 2006-2010 (Unaudited)(in US$’000)

66


Notice of Annual General Meeting

67


Notice is hereby given that the 18th Annual General Meeting of the Company will be held at the Washington Mayfair Hotel, 5 Curzon Street, London W1J 5HE on

24 May 2011 at 11.00 am for the following purposes:

1. To receive and, if approved, adopt the Director´s Report and Accounts for the year ended 31 December 2010.

2. To determine the maximum number of Directors for the ensuing year as six and that the Board of Directors so appointed be authorised to appoint on

behalf of the Members an additional Director to serve until the conclusion of the next Annual General Meeting.

3. To re-elect Mr C F A Cooper as a Director.

4. To re-elect Mr K Middleton as a Director.

5. To appoint the Auditors, and authorise the Directors to fix the remuneration of the Auditors.

6. To consider and, if thought fit, approve an amendment to the bye-laws of the Company so that all Directors be subject to re-election at intervals of no

more than three years.

7. Ratification and confirmation of all and any actions taken by the Company’s Board of Directors and the persons entrusted with Company’s management in

the year ended 31 December 2010.

By Order of the Board

Malcolm Mitchell

Secretary

Clarendon House, Church Street, Hamilton HM 11, Bermuda

25 March 2011

Any Member of the Company entitled to attend and vote at the meeting may appoint one or more proxies to attend and vote instead of him.

A proxy need not be a Member of the Company.


68

*I/We

*of

*of

being a Member of Ocean Wilsons Holdings Limited, hereby appoint Jose Francisco Gouvêa Vieira, or failing him W H Salomon both Directors of the Company.

of

as my/our proxy to vote for me/us and on my/our behalf at the Annual General meeting of the company to be held on Tuesday 24 May 2011 and at any

adjournment thereof. The proxy will vote on the Resolutions as indicated opposite.

For Against Withheld

1 To receive and, if approved, adopt the Director´s Report and Accounts for the year ended

31 December 2010.

2 To determine the maximum number of Directors for the ensuing year as six and that the

Board of Directors so appointed be authorised to appoint on behalf of the Members an

additional Director to serve until the conclusion of the next Annual General Meeting.

3 To re-elect Mr C F A Cooper as a Director.

4 To re-elect Mr K Middleton as a Director.

5 To appoint the Auditors, and authorise the Directors to fix the remuneration of the Auditors.

6 To consider and, if thought fit, approve an amendment to the bye-laws of the Company so that

all Directors be subject to re-election at intervals of no more than three years.

7. Ratification and confirmation of all and any actions taken by the Company’s Board of Directors

and the persons entrusted with Company’s management in the year ended 31 December 2010.

Signature Dated 2011

Notes

1 If any other proxy is preferred, delete the names inserted above and add the name of the proxy whom you wish to appoint, and initial the alteration.

2 Please indicate by a cross in the appropriate box how you wish your proxy to vote. If no indication is given your proxy will abstain or vote as he/she thinks fit.

3 To be valid, the proxy should be deposited at the Transfer Agents of the Company, Capita Registrars, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, no less than

48 hours before the time for the Meeting.

4 In the case of a corporation, this proxy must be under its Common Seal or under the and of an Officer or Attorney duly authorised in writing.

5 In the case of joint holders the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose

seniority shall be determined by the order in which the names stand in the Register of Members, in respect of the joint holding.

* Please insert your full name and address in BLOCK CAPITALS.


Form of Proxy

✂

Business ReplyLicence NumberRSBH-UXKS-LRBC

PXS34 Beckenham RoadBECKENHAMBR3 4TU

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